GBP/USD Daily Fundamental Forecast – April 06, 2017
GBPUSD continues to trade between 1.24 and 1.25, something we had mentioned in our forecast for yesterday as well. We expect the pair to break out of its range pretty soon but even if it manages to break through its weekly range in either direction, we have good amount of resistance and support on either side of the range and hence the pair would not be able to wander too far. It would require a lot of a clarity as far as the Brexit process and the associated negotiations are concerned, for the market to form an opinion on the actual state of the UK economy post the Brexit and only then we are likely to get a decisive move in either direction.
GBPUSD Consolidates Below 1.25
Yesterday, we saw the release of the Services PMI data from the UK which came in stronger than expected and this helped to reset the imbalance that had been caused by the PMI data from Monday which had come in at a lesser than expected value. But the pair traded within a tight range leading up to the news in the US later. We received the ADP employment report which came in much stronger than expected and this pushed the pair towards its range lows at around the 1.2450 region but thats as far as it got.
Next came the FOMC minutes later in the evening but it did little to shake up the markets though there was a mention of some members expressing concern over the high stock market prices and this put pressure on the US stocks. Apart from this, there were reports on how the new tax plan is likely to get delayed much longer and this placed doubts on the ability of Trump and his team to push through their campaign promises as he has been unable to push through the healthcare plan, the tax plan, the wall etc. This placed the dollar under pressure and helped push the GBPUSD pair towards 1.25 where it trades as of this writing.
Looking ahead to today, we do not have any major news from the UK but we have the unemployment claims data from the US. We expect the dollar to be under pressure for today which would mean that the level of 1.25 in GBPUSD would be threatened during the course of the day and a clean break higher would target