The GBP/USD pair rose during the session on Thursday as the bullishness came back into the marketplace. After the Wednesday session, we had noted how the 1.60 level was offering support, as the market jump back over it. We think this is a significant area for this marketplace, and as such we believe that the supportive action of this general vicinity should continue.
With this being said, we are still bullish of the British pound, and do expect it will rise quite a bit. We think that pullbacks on shorter-term time frames of the way to go long side, and as such this trade could be had over and over and over again.
We do see the area just above as resistive, and expect the 1.6150 level to offer a bit of trouble for the buyers. However, if we can get above that level, we think that we go much higher. In fact, we believe that we will see the 1.63 level again in the relative near future. Ultimately, we think we go as high as 1.70 in the end, especially considering what’s going on with the central banks.
The Bank of England continues to keep their monetary policy on hold, and therefore isn’t flooding the market with British pound. You can contrast this with the American version, the Federal Reserve, which of course is flooding the market with US dollars. Monetary easing is one of their favorite combinations of words, and as such they do continue to keep very weak currencies in the marketplace.
Knowing all this, we think that this marketplace will continue to rise over time but there will be pullbacks as you would expect. We like short-term pullback that shows signs of support for buying signals in this pair, and do think that this is a excellent trend continuing at this point time. Going forward, we would be long of the British pound as a core position, and be involved in several different ways. The spot Forex market is obviously one way, but we would also be using options that protect ourselves and the ETF called FXB, which of course holds British pounds
Written by FX Empire