The GBP/USD pair fell slightly during the session on Friday, as we continue to test the 1.55 level for support. I believe that we will see a bit of a fight here, but ultimately the market has broken down enough that I believe that the reddish pound will continue to sell off as the US dollar is without a doubt the most favored currency in the Forex market.
If we break down below the 1.55 level on a daily close, that would be a sign that the market breaks down to the 1.50 level given enough time. There is a lot of noise between here and there though, so it won’t necessarily be an easy move. Quite frankly, the easy monies already been made shorting the British pound. However, that doesn’t mean that we won’t continue to go lower over the course of time.
Continue downtrend
Any bounce in this general vicinity should be a selling opportunity as a represent value in the US dollar. Because of that, the US dollar should continue to strengthen overall, and that will drive the value of this currency pair down. Ultimately though, it’s only a matter of time before the buyers reenter the market. I think much like in the EUR/USD pair, we have a little bit farther to go before we change the trend yet again. Having said that, I think in the short-term the only thing you can do is sell rallies as it takes advantage of the overall downtrend. With that being the case the market should be one that is focused on shorter-term charts more than anything else, simply because there is so much noise that it’s difficult to imagine hanging onto a trade for any real length of time.
Ultimately, the only other way to serve buying is if we get above the 1.60 handle, something that I don’t anticipate seen happen anytime soon. With that, I feel that the market will ultimately go higher, but I think it’s probably going to be sometime in late January were researched see the turnaround.
