The GBP/USD pair went back and forth around the 1.60 level on Monday, essentially proving that the area is a “magnet” for price. The candle isn’t that exciting either, as it is very neutral. The candle tells me that the market is comfortable in this region, and because of this I think there must be some amount of support below the 1.60 area. The support area extends all the way down to the 1.59 level below, and because of this I am waiting to see if this area will offer a buying opportunity.
The market has been in a consolidation area for some time now, but the 1.60 seems to be special. The area above that area extends all the way to the 1.650 area, and with that I think that the market has more of an upside bias, but may hang about the 1.60 handle for a few. We will need some kind of catalyst to “get going.”
The Federal Reserve could come to the rescue of the Pound.
The Federal Reserve could make this pair go higher, essentially working against the Dollar as the central bank could say something that is “anti-Dollar” as the various members “drop hints” as they tend to have various speeches and appearances from time to time. It is often as simple manner of someone that suggests a move, and the markets react. This is probably what will eventually move this market, and at that point in time we could even get a real move – one that breaks out in one direction or another.
The British pound is inevitably tied to the European Union, and its economic health. The ECB just cut rates in a surprise move, and this of course suggests that the economy could be heading towards another slowdown. The market could be in a bit of a stalemate with both of these things working at the same time, but ultimately one has to assume the trend will continue, as consolidation normally means continuation as well.
