GBP/USD Fundamental Analysis – week of September 4, 2017

The GBPUSD pair had a very tight range of trading during the course of the week and it is indeed a surprise that the pound was probably one of the strongest currencies last week. It did not seem to be affected too much by the bouts of strength in the dollar and though there was not much by way of fundamentals to support the pound, it did manage to survive the week without too much damage and the pound bulls can look ahead to the new week with confidence.

GBPUSD In Tight Range

With last week marking the end of a month and the beginning of a new month, the only major concern for the pound traders would have been the month end currency flows and though we did have some flows, the impact of it was not as bad as was expected. Technically, it is clear that the pair is being bogged down by the ceiling across the import region of 1.3030 in the short and medium term but we are seeing some good support coming in the 1.2860 region and these 2 regions have locked the price range for now.

Even a recovery in the strength of the dollar, by way of strong ADP and GDP data did not do much to bring in weakness in the GBPUSD pair and by the end of the week, the strength of the dollar went down to a weak NFP and wages data and the GBPUSD pair closed comfortably above the 1.2950 region for the week. Looking ahead to the coming week, we have lot of peripheral data from the UK in the form of the various PMIs and this is likely to bring in some volatility.

But with the fundamentals continuing to be loaded against the UK economy, in the form of risk and uncertainty surrounding the Brexit process and choppy incoming data, we do not see the GBPUSD pair breaking through the 1.3030 region just yet. With the euro also on the backfoot as the ECB gets jittery of the strong euro and the dollar bulls also fighting to get back control of the dollar, it is going to be a difficult ride for the pound in the upcoming week and we would be surprised if the GBPUSD continues to hold the 1.2860 support region in the upcoming week.