GBP/USD Daily Fundamental Forecast March 2, 2017
With the new month underway and the month end flows out of the way, the real strength and the weakness of each currency, based on their fundamentals, is beginning to show through and that is why we have been seeing the GBPUSD under severe pressure over the last couple of days. We have been warning about this over the last several forecasts that if and when the dollar strength returns, the pound is likely to be most affected. Till last week, the pair had managed to survive as the UK economy and the US economy were under a lot of uncertainty and confusion.
GBPUSD Gets a Pounding
But with the uncertainty over the UK economy set to continue for the next few months atleast, as the Brexit process unravels itself, it was only a matter of time before the uncertainty over the US economy and the fear over the policies of Trump vanished and once this happened, the dollar would begin to gain in strength and the full effect of that would be seen in GBPUSD. This is what has been happening over the last 2 days as the dollar has strengthened across the board as Trump announced some of his pet policies and the Fed members make it clear that a rate hike in March is still on the table.
A combination of the above has pushed the pair from above 1.2400 through 1.2300 and it sits between 1.2250 and 1.2300 as of this writing and it continues to look weak. Looking ahead to today, we have the construction PMI data from the UK and the unemployment claims data from the US but with the dollar strength being the underlying theme in the markets, we do not expect any kind of respite for the GBPUSD pair and expect to continue to trade under pressure.