The GBP/USD pair kicked-off a new week/ quarter on the front foot in the Asia trades, as the bulls looked to extend Friday’s rebound from just ahead of the 1.40 handle amid broad-based US dollar weakness and a risk-friendly market environment. What factors contributed to the upside of the pair? Gain insight with today’s 2 April GBPUSD Fundamental Forecast.
2 April, GKFX – The greenback traded with moderate losses across its main peers, as Easter holidays induced market lull continues to weigh around the sentiment. The USD index drops -0.14% to hover near daily lows of 89.57.
Boost to the GBP bulls
The renewed upside in the spot can also be attributed to the draw in liquidity, which usually exaggerates the market moves. Meanwhile, a better appetite for risk assets seen across the financial markets this Monday, including the Asian equities, oil prices, and Treasury yields, also collaborate to the rise in the higher-yielding currency, GBP.
Viraj Patel, Foreign Exchange Strategist at ING explained:
“We’re now back to good old-fashioned data watching in the near-term – given that this will dictate the pace of GBP’s cyclical recovery. Under the status quo on the global economic backdrop (and trade wars is a big question mark here), it looks like a May Bank of England rate hike is in the bag.
Were the UK economy to regain some of its ‘cyclical swagger’ – and the data outperform the broadly low expectations of investors – we would expect sentiment for two BoE rate hikes in 2018 to gain further traction. This will be the cue for GBP to post another bullish move higher.”
Markets now eagerly await the ISM manufacturing PMI release from the US docket due later in the NA session for fresh momentum on the prices, as attention turns towards the UK manufacturing PMI report due out Tuesday.
2 April GBPUSD Fundamental Forecast
FXStreet’s Analyst Haresh Menghani notes,
“Immediate resistance is pegged near 1.4075 level, above which the pair is likely to aim towards surpassing the 1.4100 handle and head towards testing the 1.4135-40 supply zone. On the flip side, the 1.4020 area now seems to protect the immediate downside, which if broken might prompt some fresh selling and continue dragging the pair towards 1.3965-60 horizontal support.”
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