GBP/USD Daily Fundamental Forecast – April 03, 2017
GBPUSD continues to trade strongly amidst some short covering and also due to the month end flows that we saw last week. The pair had risen leading up to the invocation of Article 50 on March 29 and we also noticed an increase in the number of shorts in anticipation of a great fall following the invocation. But what we got was only a fall of 200 pips, more due to an increase in strength of the dollar than due to any major changes in the pound, in the days leading up to the invocation.
GBPUSD Continues to Remain Buoyant
The day of March 29, passed off peacefully without much volatility despite the invocation of Article 50 and this disappointed the bears who had expected a much larger fall. So, in the days after March 29, we saw some short covering as the disappointed bears exited their positions and this led to the rise of the GBPUSD pair from the lows of its range around 1.24 to above 1.25 and it trades comfortably close to 1.2550 as of this writing.
It looks quite bullish at the moment but we believe that the pair is due for some correction of the bounce that it has had so far. This is the first week of the month and with a variety of news loaded for the rest of the week, we would expect some consolidation today. Also, the region around 1.26 had shown a lot of selling the previous time when the price was here and so we expect the same if and when the price visits there again.
Looking ahead to the rest of the day, we have the Manufacturing PMI data from the UK and the PMI data from the US as well and these data are likely to bring in a bit of volatility. We expect any upmove to be capped by the 1.26 region and we expect some consolidation with a bearish bias for the rest of the day.