The GBPUSD pair was hit hard yesterday as the dollar began to recover across the board to begin the new week, a week where we are going to see a lot of data come in from the US and data which the markets expect to be favorable for the dollar. Cosnsidering this, it was a great start to the week for the dollar and the dollar bulls would hope to capitalise on this move and build it further though the holiday today in the US could lead to some consolidation and ranging before the volatility picks up again tomorrow.
GBPUSD Hits a Wall
The pound also suffered due to some bad data from the UK where the Manufacturing PMI came in weaker than expected. This was in contrast to the stronger Manufacturing PMI data from the US and these 2 factors weighed on the GBPUSD pair and pushed it below 1.30 and towards 1.29. We had mentioned something similar in our forecast yesterday where we had mentioned that the pair was very near a strong resistance region in 1.3030 and that considering that the pair had risen quickly and easily, it was only natural for a correction to happen.
There is an increasing feeling across the markets that the BOE could be quite close to hiking rates and these notions have been supported by the hawkish BOE over the last month or so. We also have Carney believing that the worst is over for the pound and such hawkish comments should come as a big boost for the pound. On the other hand, we are seeing the market expect some good employment numbers from the US this week which would bolster calls for another rate hike from the Fed in the near future. So, it has to be an interesting week ahead with the battle between the pound and the US raging on to see who the stronger currency is.
Looking ahead to the rest of the day, we have the Construction PMI data from the UK and we have a holiday in the US. So, we can expect the volatility and the liquidity to be low for today and we can safely expect some consolidation.
This article was originally posted on FX Empire