GBP/USD Fundamental Analysis week of September 18 2017

The star of the week was clearly the pound as it broke through higher in a fast and stunning manner on the back of some strong hawkish comments from the BOE. The underlying strength was palpable in the week before the last and it showed that it was only a matter of time before the GBPUSD pair broke through higher but the speed and the strength of the move would have surprised many.

GBPUSD Hurtles Higher

The pair had been moving slowly and steadily higher over the course of the last 2 weeks and one the pair broke through the important high of the previous range, it was clear that the direction was up. The first half of the week was choppy as some strong data from the UK and the weakness in the dollar pushed the pair through to 1.33 but it corrected lower of the back of some dollar strength due to its strong inflation data in the form of CPI.

In the middle of all this, the market was looking forward to the BOE and they delivered on their promise of being hawkish and this helped the pound to push towards the 1.34 region. The weak retail sales data from the US set the dollar on the backfoot and this helped to fuel the bullish leg of the GBPUSD pair and it shot higher through the 1.36 region before closing the week just below that region.

Looking ahead to the coming week, we have the retail sales data from the UK and the FOMC meeting announcement and statement as well. The GBPUSD continue to trade in a strong manner but that could be challenged in the coming weeks as we believe that the dollar could be set for some recovery. Though the incoming data has been choppy from the US, it does point to a trend of recovery in the data and that should help to support the dollar in the coming weeks. Of course, the pound has its own underlying strength, as the hawkish BOE has thrown the doors open for a rate hike later in the year, which would mean that the pound is unlikely to be as affected by the dollar strength like the other currencies. Traders need to be careful not to be carried away by this bullish run in the pair.

This article was originally posted on FX Empire