The GBP/USD pair initially rallied during the session on Thursday, testing the 1.57 region. However, we sold off rather drastically and crashed into the 1.55 handle. This is an area that we find very important, so we need to see the buyers step back into this market soon in order to go long. However, at the end of the session it looks as if we are going to close towards the very bottom of the range, and that of course is a very negative sign. We believe that the markets will have to find the uptrend line below supportive, or things could get ugly quick. With this, we are on the sidelines and not willing to sell quite yet, and don’t have any interest in buying at the moment because quite frankly we just don’t have the signal.
Part of the beat down in the British pound of course would’ve been the horrible Retail Sales number month over month coming out of London. It was anticipated had been 0.4%, but action came in much lower at -0.2%. This of course was a huge mess, and it suggests that perhaps the British economy is in doing as well as we once thought. However, one month is not make a trend, and it should be stated that the previous month was adjusted to the upside after more information came in. With this, it is possible that we will find buyers below.
With this, we have to wait to see whether or not there is a supportive candle that gives us an opportunity to go long, or perhaps a significant bounce off of the 1.55 handle. If we get below there, it is likely that we will test the uptrend line, and we know that the market breaking below there would of course be a very negative sign. Ultimately, if that happens, we could break down below there and reach towards the 1.52 level. Ultimately, we believe that the markets will go higher given enough time, but we most certainly are starting to see the sellers flex their muscles now.