GBP/USD Fundamental Analysis – week of July 31, 2017
The GBPUSD pair struggled during the course of the week but still managed to finish near the highs of the range last week. The pair could have taken much more advantage of the weakness in the dollar but the failure to do so speaks volumes about the weakness in the pound itself. It has now become a question of which of the 2 currencies is more weak and the one which is less weak is the one that makes progress on a specific day.
GBPUSD Struggles for Impact
The pair did start the week in a buoyant manner but the first half of the week was a struggle for the pair to make any progress. The weakness in the dollar was still apparent and though there was not much news floating around, the pair could not make much progress as the risk and the uncertainty surrounding the Brexit negotiations still continued to haunt the markets for much of the week. It was only after the not so hawkish FOMC minutes that we saw the pair make some kind of a progress through the 1.31 region and it did go as high as the 1.3150 region, which turned out to be the highs of the week.
The dollar made a partial recovery towards the end of the week as the incoming data from the US turned out to be stronger than expected. This led to a bounce in the dollar but this was short lived as the weakness returned back to the dollar on Friday which helped the GBPUSD pair to close near the highs of its range. The month end currency flows also helped the pair to strengthen during the week and we now await the upcoming week which is likely to be very important and volatile.
The upcoming week is the first week of the new month and for the pound traders, all eyes will be on the BOE. The BOE is having its meeting next week that will be followed by the rate announcement, statement and a press conference as well. After the split verdict on the rate hike last month, a part of the markets expect the BOE to push ahead with a rate hike this month but it remains to be seen whether that is really going to happen. If the BOE does surprise with a hike, then we should see the GBPUSD pair make a move towards 1.32 and then 1.33 while a failure to do so will bring the support region at 1.30 under pressure.
This article was originally posted on FX Empire
