The GBP/USD pair rose during the session on Thursday, breaking above the 1.66 handle finally. Because of this, we feel that the British pound will continue to go higher, something that we have been calling for recently. This market certainly looks like it wants to continue going up to the 1.70 level, which we see as the next major resistance area. With this, looking for pullbacks will more than likely be the best way to go forward, as the market is just a bit overextended at the moment. Regardless, the British pound has certainly been one of the better performing currencies out there, and as a result we certainly have an interest in going long.
Although the US dollar itself has done reasonably well lately, it appears that the greenback is starting to give back some of it strength, and with a currency like the British pound which has done at least well, if not quite strong against the Dollar, this should only accelerate the move higher. After all, while the other currencies around the world were struggling against the US dollar, it was the British pound that was the anomaly, moving slightly higher or at least holding its own during that time.
The 1.66 level should be somewhat supportive if we pullback, but we definitely believe that the 1.65 level will be. With that, we are looking for supportive candles on the four hour charts or higher time frames than that, as it gives us an idea of the order flow that seems to be seen in this area. The longer this move takes though, the more organic it will feel, simply as it is a continuation of buying pressure over and over. The British pound continues to strengthen overall, and with the US dollar losing a little bit of its luster, this market really only has one way to go for any real length of time. With that, we are buying over and over, hopefully building a reasonably decent sized position between here and the 1.70 level, where we would expect quite a bit of selling pressure to enter the market.
