GBPUSD surges by over 200 pips on Friday

GBPUSD surges by over 200 pips on Friday

Friday the 12th of January saw a surge in the GBPUSD forex pair with a 200+ pip move, reaching its highest level since June 2016.

The move up was a combination of strong sterling demand backed by news that Spain and the Netherlands were supporting a soft Brexit (later denied) and a weak dollar across the board.

Ongoing concerns over persistent weak inflation in the USA (even though the numbers released on Friday showed some improvement) and rumours of falling Chinese demand for the dollar caused renewed weakness.

Inflation is seen as a key driver of an economy; increases in prices theoretically should increase wages resulting in higher spending and an improved economy.

When inflation is not moving up that much after the USA pumped trillions into the system questions on whether it will ever happen are starting to be asked.

Add to this Trumps political woes on getting anything of real worth done and the sentiment toward the dollar becomes more and more negative.

From a charting perspective we saw a key break at the blue zone on the chart which brought more buyers to the pair and helped give up more upward momentum.

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