GBP/USD had a strong showing on Thursday, as the economic numbers coming out of London suggested that the United Kingdom managed to skirt past a triple dip recession, and as a result the Pound got a bit of a reprieve from selling pressure at that point.
It did manage to break above the 1.50 level, which of course we had spotted as significant resistance. However, the pair still remains below the 1.55 level, which we think will have face significant amount of resistance built into it, mainly because of the large round psychological number aspect of that level, and the cluster that we see on the chart. It will have to get above that level in order to have any seriously significant bullish run at this point time.
The thing about this pair that has is concerned is that the Bank of England should continue to be fairly easy with its monetary policy, which should eventually weigh upon the British pound. With the new Gov. coming into the Bank of England, a very dovish influence will be part of the central bank going forward. With that being the case, we think that this market will more than likely offer selling opportunities above, as the British pound should continue to suffer at the hands of the short-sellers.
We believe that the recent action does suggest that we will build a higher, but in the end we think that the longer-term sellers will see this is a selling opportunity. We of course could be wrong, and would have to admit so above the 1.55 handle. So, saying that we think that we should have a fairly significant turnaround in the next session or two, or we will simply keep going higher. If that’s the case, we have no problem going higher and buying this market as a result. After all, you simply cannot be married to your position, and if it is wrong you simply get out and go the other direction. This is essentially how we see this market, as one that’s ready to be shorting, but it may surprise us. If that’s the case, they will just buy it.
Written by FX Empire