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GBP/USD Fundamental Analysis – week of January 22, 2018

By:
Colin First
Updated: Jan 20, 2018, 11:58 UTC

The pair rose once again last week as the market anticipates a soft Brexit over the coming weeks

GBPUSD Weekly

The pound had a pretty bullish week as it closed the week above the 1.38 region and looks all set to break through the 1.39 and 1.40 region in due course of time. Of course, that would depend a great deal on how the strength of the dollar pans out in the coming weeks though it is expected that the pound would fare well against the dollar than many other currencies.

GBPUSD Looks Bullish

There were a couple of economic data points that were released from the UK over the last week in the form of inflation and retail sales data and they came in much as per expectations. Also, we saw the pound being buoyed by the anticipation from the market that they would be able to get a soft Brexit arranged in their talks with their Eurozone counterparts. This would ensure that they would retain all the trade access and this should help the UK economy to progress. But it depends on how the actual talks go through and there is a likelihood of many a slip between the cup and the lip.

GBPUSD Hourly
GBPUSD Hourly

But the market is in no mood to listen to all that and that is why we are seeing the pound move higher over the last few weeks. We also saw that the BOE leaders were also happy to see the pound move up and they did not feel the need to interfere with the rise in any way. This helped the pair to break through the 1.39 region for a brief while during the last week, on the back of dollar weakness, and though it has settled down lower to end the week, we should see the 1.40 region become attractive in the coming week.

In the next week, the focus is expected to shift back to the dollar as we head towards the end of the month. The economic shutdown that we are seeing in the US is likely to dominate the headlines for the coming week and this could bring in a bit of volatility and weakness in the pair in due course of the time. Also, as the pair approaches the 1.40 region, we are likely to see some of the traders taking profits and hence we could see some loss of momentum. The pair would need to go back down to pick up more buyers and build momentum before it pushes through the 1.40 region.

About the Author

Colin specializes in developing trading strategies and analyze financial instruments both technically and fundamentally. Colin holds a Bachelor of Engineering From Milwaukee University.

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