GBP/USD Daily Fundamental Forecast - October 6, 2016

The pounding of the pound seemed to have slowed down today but there is no sign of any change in the bearish run though. Even the continued good data out of the UK did little to reverse the trend and the pound continued to drop down through 1.2750 and then broke through the buys at 1.2700 and reached as far as 1.2684. This was pointed out yesterday as a region of strong support and this was proved right as the pair could not progress further below and there was a little bounce from this region. The pair sits at 1.2737 as we write this after making a brief sojourn towards the resistance at 1.2750.

The bounce did not do anything to change the mood and the bounce was quite weak and so far, it does not inspire any confidence at all. The ADP Non Farm Employment report came out in the evening and it did not miss the expectations by much and so the GBPUSD was little changed. Looking further ahead, there is not much by way of market moving economic news either from the UK or the US today and so we could expect the range between 1.2680 and 1.2750 to hold. If the range breaks, then we are looking at a bigger range between 1.2630 and 1.2790. Break of either extreme of this range would mean a larger change in the picture as a break of 1.2630 would mean that a much deeper bearish run is in place while a reversal above 1.2790 could get the bulls interested again. We dont think either of this would happen today and are looking towards the NFP report on Friday to point us to the next plan of action while we continue to trade this range.

The buyers dont seem to be too interested at the moment mainly due to the fact that it is yet unclear on how difficult the Brexit process is going to be and it is this uncertainty surrounding the process that is putting off the buyers and causing this crash in the pound as traders always look for stable and appreciating assets to invest in.

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