The GBP/USD pair attempted to rally during the session on Monday, as you can see failed by the time we close the market. That being the case, we did form a shooting star, but quite frankly even if we do fall from here, we are not ready to start selling. The 1.61 handle will be supportive, or break below there probably since his pair back down to the 1.5950 level. In the end though, we look at this market that’s consolidating, and that a move lower would simply be a continuation of that.
We look at this market is one that ultimately should go higher, but we need to break above the 1.63 handle in order to feel comfortable about it. If we do get that move though, we think this market will more than likely head to the 1.65 level in relatively short order, and possibly even higher given enough time. Selling this market really isn’t much of a thought us until we get well below the 1.59 handle, something that does not look very likely.
When you look at this chart, this simply looks like its more consolidation near the top of the range of trading, and that the market may simply be taken a break after such a strong uptrend. Because of that, we feel that the downside will be very difficult to take, and in less the jobs number out of America on Friday comes out very strong, we do not see the likelihood of this market going much lower than the 1.5950 level.
Ultimately, we feel that this is more about the US dollar than anything else, and probably has very little to do with Great Britain itself. The British are going to benefit from the Europeans and their exit from her session, but in the end most Forex markets are being driven by the Federal Reserve right now, and whether or not they can taper off of quantitative easing. Until we get strong jobs numbers, it’s very difficult to imagine that the Federal Reserve will be able to taper off, leaving the US dollar exposed.
Written by FX Empire