How Much Lower Can The GBP Go?

The GBP which posted its third consecutive monthly drop against the USD in July, has continued to weaken against every single one of its major peers since May this year. Brexit came and went like a crashing meteorite; first the extensive damage then the cleaning up process, which made it look not quite so bad.

Recent moves upward in the Cable have been in reaction to weakening data from the USA as it appears there will be no Fed rate increase anytime soon.

GBP – Phase 2 Underway

Nevertheless, it looks phase 2 is about to set in this coming week as most traders and pundits are expecting a rate cut from the BOE; the first in almost 7 years. The BOE is doing its utmost to stimulate an economy that had been rocked to its foundations.

Britain’s decisive referendum vote in late June to exit the EU, together with weak economic data has hammered consumer confidence and struck a blow to business activity creating a pessimistic economic environment. It is anticipated taking into effect all these circumstances, BOE will have no other option on Aug 4 but to loosen monetary policy.

“If we get a package of measures and not just a rate cut, it will reinforce the weakening trend for the pound.” Said Lee Hardman, a Forex strategist from the Bank of Japan. “I think it’s a done deal that we’re going to get easing next week, but the question is just how aggressive”.

Forex Outlook – Week Of August 1

So now it’s a wait and see situation. This Fridays NFP (Jobs report) will definitely provide some clear information as to what’s on the radar in the USA side of the world.

Either way, with BOE and the USA jobs report and a few other market moving announcements from across the globe, we should have an interesting and volatile 5 days to look forward to.

As always our ForexSignal trading team will be continuously monitoring the Forex markets, looking to identify trading opportunities and keep in you informed when they occur.

Trend Meters

Our Trend Meters are updated daily and available with all ForexSignal.com memberships. See below for the Trend Meters shown for August 1, 2016. Members can login to our ForexSignal.com members only platform to view current Trend Meters at any time.