The GBP/USD pair fell initially during the session on Thursday, but as you can see bounce off of the lows in order to form a hammer. Because of this, looks at the market is ready to go higher, but we have to keep in mind that the Wednesday candle gave back quite a bit of the gains. The fact that it did means of the move higher will more likely be choppy, but ultimately I still believe that the 1.65 level will be tested.
The shape of the hammer of course is suggestive of a move higher, but I think there simply going to be too much noise between here and there in order to expect some type of clean move. All things being equal, I do believe that this market eventually hits the 1.70 level, but that probably isn’t going to happen until we hit springtime. In the meantime, I expect an upward bias but a lot of noise.
The British pound is still favored overall
British pound continues to be favored overall against most currencies, and the US dollar might be a little bit different, but in the end I still think that the Pound will be favored against the greenback. The US dollar has A little bit of a boost due to the fact that the Federal Reserve is talking about cutting back its bond buyback program, but ultimately the United Kingdom seems to be more of a safe bet on a tightening policy than the United States, at least as far as any significance is concerned.
I think pullbacks will continue to offer nice buying opportunities as well, and the 1.6250 level should be very supportive and a great place to see some type of supportive action in order to start buying. Would represent value in the market, as the British pound is absolutely skyrocketing against other currencies such as the Swiss franc. That being the case, I have absolutely no scenario in which I’m willing sell this market, and quite frankly would ignore any sell signals for the time being.
