The GBP/USD pair try to rally for the balance of the money session, but as you can see gave back quite a bit of the gains. When I do find significant is the fact that gave back most of the gains right around the 1.65 handle, and at the end of the day formed a shooting star. Nonetheless, it was a very illiquid trading session so there’s only so much you can get out of it in the first place. It simply seems to reiterate the fact that the 1.65 level is indeed going to be resistive, but quite frankly I think that any pullback here is going to be a nice buying opportunity.
Looking at the chart, I can see quite a bit of support all the way down to the 1.6250 level, and therefore I think that any pullback will meet buyers rather quickly, and could be the momentum gathering exercise that’s needed in order to go higher. The other alternative of course is that if we break the top of the Friday candle that would simply be an impulsive move higher as well.
Jobs and the Federal Reserve.
Jobs numbers out of the United States of course will be very important, as we pay attention to what the Federal Reserve is doing. While it appears that the Bank of England has no alternative but to stop its easing policies, the truth is that the Federal Reserve is in fact starting to tighten. The fact that they have tapered off of quantitative easing it has been a potential warning shot to the traders out there who are reliant on such free and easy capital. That being the case, we should see an increase in the value the US dollar overall, but this pair has been quite a bit of an anomaly. The British pound itself has been strong, so therefore I would expect his pair to continue higher, but since the US dollar is starting to gain strength, this might actually be a little bit of a disappointment for those of you who are looking to buy the British pound. Quite frankly, I think the real action will be against other currencies such as the Japanese yen, and perhaps the Swiss franc. It’s not that you can’t make money to the upside in this pair, it’s just that is going to be a real fight.
