The GBP/USD pair continues to be very volatile, as we have gone sideways in a tight range during the day on Thursday, testing the 1.35 level. I believe that the market should continue to be choppy, and I recognize that the noise that we see in this market is due to the Federal Reserve, and of course the outlook for the British pound and the interest rate outlook for Great Britain. Ultimately, this market should continue to be one that goes back and forth, and I think that short-term trading is probably the best way to go. However, if we broke above the 1.3650 level on a daily close, the market should continue to go much higher. That is a break above the gap from the Brexit vote, and of course is a significant turn of events and should continue to point towards higher levels.
I think that overall, most traders are looking to buy dips when it comes to the British pound as the Bank of England has suggested recently that it was only a matter of time before they would have to raise interest rates. In fact, it’s likely that the markets will continue to favor the GBP, as although there is tightening coming for the Federal Reserve, the reality is that the “normalization” of interest rates is going to be at lower levels than previous economic cycles. Because of this, I think that it is only a matter of time before we see the longer-term uptrend and the British pound continue, and I think the given enough time we could be looking towards the 1.50 level above. Ultimately, any type of dip will more than likely be looked at as value that traders will be taking advantage of in the future.
Written by FX Empire