The GBP/USD pair fell initially during the session on Monday, as the markets looked like they were getting ready to head back to the 1.50 handle. However, we found support below current levels and turned back around to form a rather positive candle. The candle of course looks like one that suggests the buyers are taking back over, and with this we have no interest in shorting this pair at the moment. We believe that the market now going above the 1.52 level probably sends the British pound heading to the 1.55 handle given enough time. We recognize that area as a significant barrier though, so it’s going to be difficult to imagine this market breaking above there anytime soon. What frankly, we have gone so far in such a short amount of time we would anticipate that there would be a lack of momentum to break out above that region once we got there.
Pullbacks at this point time should be buying opportunity as unless of course we managed to break down below the 1.50 handle. We don’t think that’s going to happen now, and we do believe that the British pound is going to continue to grind higher and that it will attract more and more in the way of buying. After all, the United Kingdom has a GDP number coming out today, and that could be the catalyst to push the value of the British pound higher.
With this, we like buying this pair on dips, and realize that even if we do go higher at this point in time, it’s likely that we are going to see quite a bit of volatility. That volatility keeps us buying short-term dips, and keeps us from being comfortable holding onto longer-term positions. Nonetheless, we still anticipate seeing the market head to the 1.55 level, as it is a longer-term target overall. We have no interest in selling again until we get below the 1.50 level, and quite frankly that is probably an area that needs to be cleared by a good 100 pips in order to be truly broken.