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GBP/USD Daily Fundamental Forecast – February 26, 2018
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The pair has been moving on either side of 1.40 region for the past several days

The GBPUSD pair continues to trade in a choppy manner on either side of the important 1.40 psychological region and this is set to continue for the short term as the market decides which way it wants the dollar to move. It is likely that the dollar is set to dominate the focus of the markets in the short and medium term as well.

GBPUSD Moves Either Side of 1.40

The pound bulls have done decently well so far considering the fact that the dollar has been moving higher against most of the other instruments. The pound bulls have been able to hold the fall against the dollar and have been able to make a stand in such a situation and this has helped the pound to continue to hug on to the 1.40 region despite some pressure from the dollar. The pound has been buoyed by a strong and hawkish BOE and the continuous progress in the Brexit process over the last few weeks.


This has helped the pound in the short term but it remains to be seen how long it can hold fort on the back of growing dollar strength. With the Fed set to hike rates in the coming month and also set the platform for further rate hikes during the rest of the year, it is expected that the dollar would be strong in the short and medium term and this could bring in further weakness in the pair during the medium term. The pair has been able to hold support in the 1.38 region so far but it is more of consolidation and ranging that we are seeing in the markets now.

Looking ahead to the rest of the day, we do not have much by way of data from the UK or the US but as we approach the end of the month, we are likely to see a lot of trade positioning and month end flows and this is set to bring in some volatility in the pair. We are also going to see the new Fed Chief Powell testify later in the week which should add to the volatility.

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