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GBP/USD Daily Fundamental Forecast – February 20, 2018

Colin First
Updated

The pound has been moving lower on the back of some sustained dollar strength that has been seen across the markets over the last 24 hours. This has caused the pair to push through the 1.40 region during the course of trading and now the pair trades comfortably below that region which increases the possibility that the bears could be gaining control.

GBPUSD Lower

But it has to be remembered that we had a bank holiday in China and the US yesterday and hence the volatility and the liquidity had been lower than normal. This should mean that it is likely that these moves could be reversed and that these moves do not have a great standing at this point of time and so the traders should not be carried away by the strength of the dollar at this point of time. Many of the pairs, including the GBPUSD pair, continue to trade within specific ranges and this is an indication that the market is yet to make up its mind on which way it wants to go.

GBPUSD Hourly
GBPUSD Hourly

So, unless there is a breakout on either side, and a clean one at that, we cannot be sure whether the pair is going to be bearish or bullish in the short term and hence it is important for the traders, especially the medium term and the long term ones, to keep their money firmly in their pocket till the direction is known. The pound has been pretty volatile over the last few weeks as the dollar strength has challenged the hawkishness from the BOE and the anticipation of rate hikes from the Fed has helped to feed the dollar strength which has kept the traders busy.

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Looking ahead to the rest of the day, we do not have any major economic news or data for the day from the UK or the US and so we can expect some consolidation and ranging on either side of 1.40 for the day with a bearish bias.

This article was originally posted on FX Empire

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