The GBP/USD pair broke higher during the course of the day on Monday, breaking above the 1.55 level. That is an area that has been massively resistive in the past, and as a result we feel that this market breaking out to the upside of course is a very positive sign for the British pound going forward. Also, we have to keep in mind that the United Kingdom releases its Initial GDP numbers today, which of course can move this market. We feel that any pullback at this point in time could be a buying opportunity, especially if we stay above the bottom of the range for Monday.
The candle for Monday was rather bullish and shows that there is a significant amount of buying pressure. If we can break above the top of the range, that is reason to start buying as well, as we feel the market should then head to the 1.58 level. If that’s the case, the market will probably be relatively choppy, but ultimately we feel that we have just entered a potential “buy-and-hold” type of situation. We do not believe that selling is going to be easy to do, and quite frankly we have no scenario in which we are willing to sell this market until we break down for several days in a row. By all means, the British pound appears to have seen quite a bit of buying pressure.
Adding to the positivity of this pair is the fact that the British pound continues to break out against other currencies as well. The Japanese yen is currently being demolished by the British pound, as is the Swiss franc. In other words, it appears that money is flowing into the United Kingdom and away from so-called “safer” currencies. We believe that the British pound will start to become one of the most positive currencies that we trade. We will of course keep an eye on this market but we believe going forward buying on dips in order to increase your position will probably be the way to make the most money.