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Colin First

The pound had a pretty strong week on the back of a weak dollar and a strong euro and this helped the pound to piggy back on these market-wide moves and move higher during the course of the week. Looking at the incoming data, there was not any major change in the fundamental or any economic events to drive the pound and so the upmove should be viewed purely from a technical standpoint and as a kind of a rally on the back of a weakened dollar.

GBPUSD Moves Steadily Higher

For the past few weeks, the GBPUSD pair had been trading in a soft manner leading to the belief that the pair might eventually move lower. Also, there was not much happening for the pound as the focus of the markets was clearly on the euro and the dollar and the traders were not paying too much attention to the pound. Also, the incoming data from the UK was steady at the best and there was not much to support the pound.


With the Brexit talks proceeding in an ongoing manner and not much developments on that side, it was left to the dollar to either make or break the GBPUSD pair but over last week, we saw the dollar progressively weaken across the board as the House logjam and the threat from North Korea dominated the markets and put a lot of pressure on the dollar. This helped the GBPUSD to shake off its lethargy and move through 1.30 and then through 1.32 during the week and close the week near the highs of its range and continue to look strong at the end of the week.

Looking ahead to the coming week, after the focus on the dollar and the euro over the last couple of weeks, it is the turn of the pound to be in focus in the coming week as we have the CPI data and the rate announcement and statement from the BOE. We also have the CPI and PPI data from the US in the coming week and a combination of all these should guarantee a lot of volatility in the GBPUSD pair. The price is now in a key region and  clean and clear break through 1.3260 should carry the pair towards 1.34 and 1.35 while a dovish BOE is likely to push the pair back towards 1.30.

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