The pound has been trading in a strong manner since the beginning of the day though there has not been much going on by way of fundamental developments. There was not much of economic news on Friday and so the price action on that day was dominated by consolidation and ranging for much of the day on Friday.
GBPUSD Buoyed by May Comments
Late in the day on Friday, during the US session, we received reports of growing support for the tax reform bill in the US and it appears that the bill would be passed during the course of this week. This gave a boost to the dollar which led the pair to move lower during the late session on Friday. Once the bill is passed sometime this week, we expect the strength of the dollar to continue for the short term and for the rest of the year and this should keep the pair under pressure during this period, though it remains to be seen how much that would be.
Over the weekend, we had the UK PM May reiterating that she is determined to push through the Brexit process and that she would be able to work out a deal in the short term with regards to the payment that the UK has to make and the trade access that it is likely to get. These are the 2 most important aspects that the UK would be worried about and so would the markets. The process seems to have gone a bit stale of late and this encouraging talk from May has been able to give a slight boost to the pound as of this morning.
Looking ahead to the rest of the day, we do not have any major news from the UK or the US and so we can expect some consolidation and ranging for much of the day. Volatility is likely to pick up a bit late in the day when the US session begins and we get more updates on the passage of the tax bill.