- This is a market that a lot of you won't be paying attention to, but it is forming an interesting technical pattern that I think is worth talking about.
- We are hanging around the five level, and the thing that you should be aware of in this pair is that the risk, or the risky currency, of course, is the Polish zloty.
So therefore, if economic conditions seem well then you will see this GBP/PLN pair generally fall. Furthermore, you have to always keep in mind the interest rate differential. What's interesting is the Polish interest rates, are slightly higher than Great Britain, but nothing drastic. So that's interesting that we continue to see the market fall.
With this being the case, I think you have to look at this as a market that you just follow the pattern that we've been in with the 200 day EMA above and the 5.08 level offering a bit of a barrier and the 4.95 level underneath offering support. As we ended up rallying and giving up strength. And I should also point out that we've seen the British pound, somewhat fail for the day.
The trend is downwards, so make sure you are aware of this.
At least I think we could continue to see downward pressure. All things being equal, you need to make sure that you have a reasonable spread at whatever broker you're using. But about 20 pips seems the norm. Position sizing will be crucial in that environment. I do like fading signs of exhaustion. It looks like we're starting to see them.
Because of this, I think you are looking to short the British pound against the Polish zloty, although the interest rate differential doesn’t necessarily make it as compelling as it could be. Typically, Polish interest rates are quite a bit higher than they are in relation to the United Kingdom, so keep this in mind and that could be a reason why we continue to see sideways action.
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