The GBP/USD pair fell hard during the session on Wednesday, breaking through the 1.60 level like it wasn't even there. I have to be honest, I didn't think this would happen quite this way, but it still shows signs of support right around the 1.5950 area, an area that had a gap from a couple of weeks ago. That being the case, it doesn't really surprise me that the market stopped or didn't bounced slightly. However, I do see the potential for further weakness based upon the length of the red candle, and therefore would not be surprised at all to see this market fall to the 1.5750 level, the neck supportive area that I see on the chart.
Going forward, I believe that this market will find support soon, and as a result I am not a seller. I believe that a daily candle looks supportive will be a perfect opportunity to start buying the British pound cheaply, and therefore should find plenty of buyers coming into the marketplace in order to take advantage of the value found recently.
Janet Yellen could be the British pound’s best friend.
With the suggestion that Janet Yellen could very well be the next Chairperson of the Federal Reserve, it looks likely that the quantitative easing program that we see out of United States will continue for quite some time, and because of that I think that the US dollar will continue to fall over the long-term. After all, Mrs. Yellen has shown over time that she is very dovish, which of course is always negative for the currency in question. On top of that, the British pound has been fairly strong over the longer term.
Going forward, it appears that Europe is starting to catch up with North America on the whole, and if that's the case it's very likely that money will serve flowing back into the European region, and that of course includes United Kingdom. That being the case, I believe that this market will continue higher but I do not have the supportive candle in order to start buying quite yet.
