GBP/USD Fundamental Analysis – week of March 19, 2018

The GBPUSD pair had a choppy week overall where we saw the pair trading within a tight range. This is understandable considering the fact that both the BOE and the Fed have important meetings slated for next week and the traders in each of these currencies would be hoping that it would be favorable for them. They are keeping their cards close to their chest at this point of time.

GBPUSD Stuck in Range

Also, technically as well, the pair seems to be caught in a tight range between the 1.38 and the 1.40 regions at this time and that is also one of the reasons for the consolidation. The traders have been trying pretty hard to push the pair in either direction but they have largely been unable to do so and this is only making sure that the breakout, if and when that happens, is likely to carry on for a long time and this would be large as well.

For the pound traders, the meeting of the BOE would be important, though a rate hike is not expected. The BOE is trying to sound as bullish as it can but with its choices being limited, it is going to find it difficult to drive the pound purely based on talk. The other central banks have been able to proceed with their rate hikes according to the schedule and plan but the BOE have been held back and it remains to be seen what they are going to do to overcome this.

On the other hand, the Fed is expected to hike rates for the first time this year and they are also expected to reveal some part of the timeline for the rate hikes in the future. The risk for the dollar bulls is that they might be expecting too much from the Fed which they may not be able to fulfill and this is likely to lead to some weakness in the dollar next week. If that happens, then we are likely to see the pair finally make the breakout through the 1.40 region and the pound bulls would be hoping to make sure that the breakout makes the prices stay above this region in the short term so that they can bring about the next bullish leg in this pair.