GBP/USD Fundamental Analysis – week of August 28, 2017

The GBPUSD pair managed to survive the week purely due to the weakness of the dollar and also due to the fact that it was able to piggy back on the bull run in the euro. For most part of the week, the pair was in a bearish mode as it broke through the 1.28 region and spent most of the week moving on each side of this region without any specific direction.

GBPUSD Continues to Trade Weakly

We had mentioned in our daily forecasts that the pair is likely to continue to trade in a weak manner and any bounce in the pair should be viewed as an opportunity to sell the pound and should not be misled into buying it. This proved right during the course of the week as the pair continued to move lower though there was not much economic data driving such a move. This move down came from the risks and the uncertainties driving the pound as the Brexit process unfolds itself. Even some decent incoming data from the UK was not enough to lift the pound.

This continued for the major part of the week and once it broke through the 1.2860 support region, the downtrend was further confirmed. But we had mentioned that this break did not have as much force as we would have expected in such an important support region and we were proved right on Friday as the weakness in the dollar and the strength of the euro, following the speeches of Yellen and Draghi, helped the GBPUSD pair to recover through the 1.2860 region and end the well just below the 1.29 region.

Looking ahead to the coming week, we do not have any major news from the UK but with it being the month end, we could see the pound being rocked by month end flows. We also have the NFP and ADP data from the US which is likely to keep the GBPUSD under pressure during the course of the coming week with the region around 1.3030 serving as the ceiling for the medium term.