Yahoo Finance GBP/USD Fundamental Analysis – week of January 15, 2018
The pound spent most of the week confined within a tight range and it was more of consolidation than anything. It appeared that it would only be a matter of time before the GBPUSD pair broke through the range and it was also clear that if and when it did so, the move would be large and thats what we saw towards the end of the week as the pound piggy backed on the euro and rose higher during this period and looks set for more gains.
GBPUSD Piggy Backs on the Euro
There was not much fundamental developments from the UK and this was evident from the way the price action happened in the pound. The incoming data was also not very decisive to push the price in either direction and a combination of these factors kept the pair within a small range and in consolidation mode. But it was clear that the bulls were in control and even when the dollar was holding steady and making significant gains against the euro, the bulls in the pound ensured that the fall in the pound was very less and within the range.
This was an indication of the underlying strength and hence it was only a matter of time before this came forth and this happened towards the end of the week. The ECB released hawkish minutes from its meeting in December which signalled an end to the QE towards the end of the year. This not only pushed the euro higher but it also set the dollar on the backfoot. The Eurozone got a further boost with Merkel in Germany managing to cobble together a coalition and this helped the euro higher and the pound piggy backed on that move. Once the pair moved through the highs of its range, that was the trigger to bring in many more buyers into the pair and it finished the week above the 1.37 region.
In the coming week, the focus would be on the pound as we have the inflation and the retail sales data from the UK. The incoming data of late, from the UK has been choppy and though the bulls have managed to keep the pair higher, it would need some support from the economic data to keep its bullish run going for longer. Hence the traders would be watching these pieces of data in the coming week and if there is any sign of any weakness, then we are likely to see the pair move higher. But the highs of the range should serve as good technical support and we can safely assume that the pair would continue to trade above the 1.36 region in the coming week.
This article was originally posted on FX Empire
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