GBP/USD Fundamental Analysis – week of October 9, 2017

GBPUSD suffered a great deal over the last week as a combination of economic and political weeks during the course of the week weakened the pound and it now it seems to be in a very shaky position and looks set to weaken even more in the coming weeks. This has been a great turnaround for the pound which had been one of the strongest currencies around, just a couple of weeks earlier.

GBPUSD Hit Hard By Politics and Data

The pound was rocked by the news that there was uncertainty on whether the UK PM May would continue beyond a year. She had faced a lot of flak after the UK elections for failing to win a strong majority after calling snap polls. But she managed to hold on to her position and over the last few months, she had been handling all the domestic issues in a deft manner and she had also been pushing the Brexit process along through the UK Parliament and had been fairly successful all along. But lately, there has been increasing talk of a revolt against her within her own party and this has led to speculation that she might region. This risk and uncertainty has hit the pound very hard and pushing it lower.

The data from the UK has also been very choppy and this has raised questions on whether the Brexit process is beginning to take its toll on the UK economy and hence the pound. A combination of these events has seen the GBPUSD pair drop by around 350 pips during the course of the week with no bounce of any sort whatsoever.

Looking ahead to the coming week, from the UK, we have the manufacturing production data only while from the US, we have the retail sales and CPI data as well as the FOMC meeting minutes. With the market still looking forward to a rate hike in December, it is likely that the minutes would be watched very closely for any further signs of the hike. If the minutes come out hawkish or the data from the US is strong, then we are likely to see the pound getting hit further in the coming week which should then see the GBPUSD pair challenging the 1.30 region.