GBP/USD Fundamental Analysis week of September 25 2017

The GBPUSD pair had a very tight week where the pair was locked within a tight range for most of the week but what should keep the bulls happy and interested is the fact that the pair did not break down despite the decent strength in the dollar and the pound continues to be the darling of the markets and full of strength and vibrancy after a period of consolidation last for a few weeks.

GBPUSD In Tight Consolidation

It was a week when the focus of much of the markets attention was on the FOMC announcement and the Fed. The incoming data from the US over the last few weeks had been choppy and this had led to doubts on whether the Fed would be able to proceed with its plan of another rate hike in December. The Fed had also been seeing the dollar getting battered around the markets and had done little to reverse the trend and this had led to speculation on whether the Fed had any specific instructions to keep the dollar weak. The Fed shut down most of such talk by being hawkish. The dot plot clearly showed that the Fed members were still looking for a rate hike in December and this led to a bout of strength in the dollar which pushed the GBPUSD pair to its range lows.

But the pound drew strength for the last week from some of its own fundamentals as the UK government has managed to get the Brexit bill passed through Parliament smoothly and so far, they have handled the process very well. Also, there were reports that the UK PM May had offered 20 billion euros in return for free market access and this was positive news for the UK economy and this helped to keep the bid under the pound for the week.

Looking ahead to the next week, it is the last week of the month and hence the GBPUSD pair is bound to be affected by the month end flows. Also, we have the GDP data from the US which is also likely to bring in some volatility. The first half of the coming week is likely to see some consolidation and this will be followed by a lot of volatility in the second half of the week.

This article was originally posted on FX Empire