Yahoo Finance GBP/USD Fundamental Analysis – week of November 20, 2017
The pound began the last week clearly on the backfoot as reports that 40 MPs from within the party of the UK PM May were against her continuing as the PM and this brought in a lot of uncertainty in the UK and this placed a lot of pressure on the pound. This story failed to develop too much during the course of the week and this helped to ease off the pressure as the week wore on.
But the fact remains that May is clearly under pressure both domestically and internationally as well. She has to manage the revolt within her own party and at the same time, she has to put up a brave and strong face at the Brexit talks and also ensure that the process and the talks move on smoothly to their logical conclusion. She cannot afford to walk off the talks with no deal being reached, though there have been some calls for doing the same. This would turn out to be disastrous for the UK economy which is already beginning to suffer.
GBPUSD Under Pressure
This fact is borne out by the weak data that we have been seeing from the UK over the last few weeks as the effect of the Brexit process begins to take its toll on the economy. Her troubles within the UK are clearly affecting her position in the talks and this is the last thing that the UK would want. The dollar weakness during the course of the week was the only helping factor for the pound which managed to bounce off the lows in the 1.3060 region and closed the week above the 1.32 region but it remains to be seen how long it can remain bid.
Looking ahead to the coming week, we have a speech from Yellen and also the FOMC minutes from the US. We also have the inflation report hearings and the second GDP data from the UK and all of these are likely to bring in a lot of volatility in the GBPUSD pair. The weakness of the dollar could get overturned if there are enough hints of a rate hike from the Fed in December and if that happens, a break through 1.3060 seems inevitable.
This article was originally posted on FX Empire
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