The GBP/USD pair initially fell during the course of the session on Wednesday but bounced off of the 1.44 level in order to form a nice-looking hammer. The hammer of course is very interesting because it forms right at the previous resistance area, so seen support at this region isn’t much of a surprise. If we can break above the top the hammer though, that should be a longer-term buying opportunity. We could reach all the way to the 1.47 level, perhaps even higher than that.
Keep in mind that the Bank of England has an interest rate announcement during the session today, so it’s likely that we will get some type of volatility. It’s not necessarily that we should see some type of actual action buying the central bank, it’s more like people will be worried about the comments coming out of the central bank as to expectations. However, the biggest question is an even going to be that, it’s going to be whether or not the United Kingdom leaves the European Union, as this has been dominating the headlines around the world recently.
Part of the volatility to the downside recently had been a question of whether or not the British exit, but at the end of the day it looks like the market has perhaps realize that it put far too much significance on what that action would mean. The market should continue to grind towards the 1.50 level given enough time, and as a result I am bullish but at this point time I don’t see an interest in selling because there’s just so much noise below. Ultimately, the markets will continue to go back and forth and offer plenty of opportunities, but at this point in time I still feel that the upside is probably going to be the easier route to take as there has been so much noise below the area that we currently trade in right now, and as a result any fall from here would be choppy to say the least, if not almost impossible to deal with.