GBP/USD Daily Fundamental Forecast
It was a day of fast developments, rumors and uncertainty in the UK but the result was the same. A bounce happened and as expected, the bounce was sold into. The bounce happened for a flimsy reason and it was clear right when the bounce was happening in the GBPUSD pair that it was only a matter of time that the bounce was going to be sold into and thats what happened as well.
Pound to be Under Pressure
The GBPUSD pair pushed through 1.2200 and went up to 1.2250 on rumors that the UK PM May may not invoke Article 50 this week. There was no indication from them that it would be invoked this week, in the first place, and hence we could not understand why the pound should rally when the news came in that they wouldnt. In any case, it turned out to be a mere rumor and the bounce fizzled out quick enough.
Then we had the UK Parliament giving the go ahead for the Brexit process to begin and it is widely expected that the Article 50, to begin the process, will be invoked this month as planned. This will kick off the long Brexit process which is likely to be filled with hard negotiations from both sides and hence likely to bring in a lot of fear and uncertainty and rumors over the UK economy looking into the future.
We also have news that the UK government might reject the request from Scotland to hold a referendum for Independence. The UK is already mired in a lot of uncertainty and they would not want it to be made worse by such referendums, atleast not at this point of time and hence rejecting it is most likely the best outcome. All these events pushed the GBPUSD pair back towards the 1.2200 region where it trades as of this writing.
Looking ahead to today, we do not have any data from the UK while we have the PPI data from the US but all eyes will be firmly on the FOMC rate announcement and statement tomorrow and with Article 50 also likely to be invoked this week or the next, we should see the GBPUSD pair under pressure in the short term.