GBP/USD Daily Fundamental Forecast – March 23, 2018

The pair seems to be struggling near the highs of its range as the threat of a global trade war looms ahead and the market is confused on how to react to the situation at hand. The GBPUSD pair was expected to get a drive higher from the BOE but that has not happened as the BOE kept the rates on hold and the focus shifted to the global trade.

GBPUSD Under Pressure

The BOE was not as hawkish as expected but the impact of that on the pound was limited. What seems to have affected the pound even more is the imposition of tariffs on the import of Chinese goods. Though this does not have a direct impact on the pound, this has raised the global risk by several notches and it is bound to affect the UK as well. The Chinese are also looking to respond in it though it i not clear on what options that are being studied by them as of now. They have already imposed tariffs on some US goods in retaliation but we believe that there is much more in store.

We also believe that this threat and uncertainty is only going to escalate in the coming days as the US might look to expand the range and width of these tariffs. The Eurozone leaders have already expressed their concern about thi and we believe that if the range is expanded, the UK cannot remain alone in this. That is why we are seeing the global currencies under pressure as more and more details emerge and we continue to live in uncertain times.

Looking ahead to the rest of the day, we do not have any major economic news or data from the US or the UK but we believe that the focus is clearly on the global trade for the short term and this should keep the various pairs under pressure as the market sorts out its response to the same.