The GBP/USD pair fell during the session on Monday, slicing through the 1.55 handle again. However, I see a lot of support below and the fact that we're just now starting to dig into a massive candle from last week that was very positive suggests to me that this is a short-lived pullback. In the end, it would not surprise me at all to see this market find enough support below to keep the buyers interested. Quite frankly, I think there is support all the way down to the 1.5250 level, and that being the case it's very difficult to short this pair.
Having said that, I do think that ultimately we will have to find support at that level in order to keep the uptrend. If that level does get broken to the downside, I believe at that point time this pair will really start to disintegrate. It will be interesting to see what happens, and I can guarantee that the Federal Reserve and whether or not it's going to taper off in the month of September will be a major issue with the exchange rate of this pair. Until then, is probably going to do very little.
Summertime
Remember, it still the summertime and that means there's almost no volume. A lot of the big traders are simply away from their desks and sitting on the beach. You're more likely find traders in the Hamptons, or perhaps St. Martin then you are on Wall Street. That being the case, it's very likely that this pair will discount to meander around and do nothing in particular between now and the middle of September. Some summers actually take forever and it seems that that's going to be especially true with this particular situation as the world waits to see what the Federal Reserve does. If they do not taper off, that will be horrible for the US dollar, and this pair should hit 1.5750 with no trouble at all, just as tapering would be very strong for the dollar and probably collapse this pair, moving it back towards the 1.50 handle.