The GBP/USD pair broke down during the session on Thursday, slicing below the 1.48 level. On top of that, it was a good sign that the sellers were still in control as the shooting star and Wednesday gave back so much of the gains. Because of this, it appears that the downtrend is ready to continue, and it’s more than likely going to be a market that you can sell rallies in off of short-term charts. I believe that the US dollar continues to strengthen overall, and will be the favored currency in the Forex world. Although the British pound is soft against the greenback, I don’t necessarily believe that this is a horrible currency. It’s just a matter that the US dollars that strong against everything.
Now that we have broken below the 1.48 handle decisively, I believe that the market then heads to the 1.45 level. After all, it’s the next large, round, psychologically significant number, and as a result the market will naturally be attracted to it. With fact, I believe that you can continue to sell rallies again and again for short-term trades.
US Dollar Index
Keep an eye on the US Dollar Index. It looks as if it’s ready to break above the 100 level, and although the British pound isn’t necessarily the largest component of that contract, it does of course show that there is a significant amount of support for the US dollar in general. The higher that goes, the lower this goes.
Get to keep in mind that the British are highly tied to the European economy, and much like the Swiss, the British have the misfortune of having to deal with the Europeans as their neighbors. There is quite a bit of toxicity and the European Union, and as a result this will greatly influence the direction of the British pound. With this being said, I have no interest in buying this pair at all, unless of course we somehow break above the shooting star from Wednesday.
