Introduction

In this article, GBP/USD will be analyzed both fundamentally and technically and as known nothing is impossible in Forex, so different scenarios will be drawn to express about the most probable scenarios with the GBP /USD.

What is affected the move of GBP/USD nowadays:

Fundamental Analysis:

GBP/USD is affected now by two different policies by both Bank of England (BOE) and United States Federal Reserve (FED) and also affected sometimes by UK internal issues like last Scotland independence and UK exit from European Union (EU), finally pound and other currencies is affected due to strong growth in US in the last months which make US$ to be favored.
  • Different policies by BOE and FED:

In last BOE meeting, Feburary,2016, Bank of England votes 9-0 to keep interest rates on hold, market expectation of hiking rates delay to 2018 or 2019 especially due to extremely low inflation and free fall of oil prices.

In different, US FED is ready raised interest rate for the first time from ten years, FED made the historic decision after strong employment and moderate growth of economy and inflation.

  • Extremely low inflation in UK:

In last May CPI release, it was the first time UK inflation negative since 1960.strong losses of oil prices in this and last year is the main responsible of low inflation in both UK and different advanced countries.

  • Brexit fears :
The United Kingdom European Union membership referendum is scheduled to take place in the UK and Gibraltar before the end of 2017, fears of UK referendum from EU affected GBP/USD adversely.

  • Moderate US growth:

US growth still so strong in last quarter as it growth increase 3.7% in last quarter VS 0.6% quarter before, last US growth Q/Q were as follows (4.6%, 4.3%, 2.1%, 0.6% and 3.7%, 2% and 0.7% last quarter), US growth still moderate and accepted for FED.



Technical Analysis:
  • Pair review:

GBP/USD felt freely in the last three months reaching around 1.4000 before slight recovery to 1.4500, pair still below 2015 low, pair may still able to reach 2009 low around 1.3500 if 1.4000 broken, 1.5200 will be the ultimate resistance in the midterm view, pair may stay above 1.4000 if brexit vote is expected to be rejected.


  • Different scenarios:
  1. GBPUSD will stay move between 1.4000 and 1.5100 without any break up or down, this scenario may have probability 50%, 1.4000 is physiological level which may be hold as support, 1.5100 is broken monthly support which may be proved to hold as ultimate resistance for the midterm view.
  2. GBPUSD will break lower 1.4000 physiological level aiming 2009 low at 1.3500, this scenario may have probability 30% and this will be happened if brexit fears increases or if FED hike rates again in the next meeting.
  3. GBPUSD will break higher 1.5100, this scenario may have probability 20%, pair may break higher if brexit fears slashed or if FED decides no rate hike till the end of this year.
Conclusion:

GBP/USD is still affected by different BOE and FED policies, UK inflation still extremely low, UK still not expected to raise rates in the next 2 years, FED may raise interest rates three times this year, this should support USD against GBP.
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