The GBP/USD pair fell hard during the course of the day on Tuesday as CPI numbers out of the United Kingdom came out much less strong than anticipated. Because of this, the British pound loss strength and with that we ended up seeing this pair breaking down. The market now appears like it’s poised to go down to the 1.65 handle, which we see as the next major support area. Bounces at this point in time on short-term charts should continue to be selling opportunities, and with that we would be sellers time and time again.
The 1.68 level is pretty significant resistance at this point as far as we can tell, and as a result we are not willing to buy this market until we break above that level. It’s a little bit different though, if we managed to get supportive action at the 1.65 handle as it is a larger support level on the longer-term charts.
Having said that, the market is essentially “sell only” type of situation at the moment, so of course we will not argue with that sentiment. On top of that, we closed at the very lows of the day, which normally means that we should see selling continue into the next day. We have no scenario in which were willing to buy in this general vicinity, so we don’t even look for those opportunities. Quite frankly, it is possible that we a bounce from here but as stated above, we believe that it will simply be a nice selling opportunity in a market that should offer more and more opportunities to sell.
If we do manage to get above the 1.68 level however, that should send this looking for the 1.70 handle, and then possibly the 1.7200 level, which of course is the next resistance barrier that we see. However, we see going higher like that as less likely than a continued break down, at least until we get to the 1.65 handle, so although we are aware of those possibilities, we find them is very unlikely.
