The GBP/USD pair went back and forth during the course of the session on Tuesday, as we continue to flutter right above the 1.55 level, an area that we see support at time and time again. With this, I believe that the market will eventually continue to go higher, reaching towards the 1.58 level. That is my target, but I recognize that there is a lot of volatility in this pair. It’s kind of a strange situation at the moment, because the US dollar is starting to soften a bit over the last 24 hours, but the British pound didn’t exactly take off to the upside as I would have anticipated.
I believe that the Bank of England will eventually have to raise rates, but it might be a little while. At the same time, the Federal Reserve is expected to raise rates as well, but we’ve known that for some time so that really shouldn't be much of a factor in this pair. With this, I believe that it’s only a matter time before it’s time to start buying again. I’m looking for some type of supportive candle or a hammer, or something to that effect in order to go higher.
No interest in selling
Have no interest in selling this market, at least not until we get down below the 1.52 level, and we are quite a ways from there. With that, the market looks as if it is going to be “buy only” for the time being. I think that the market continues to struggle with the idea of what’s going on interest-rate differential wise, but I think that it’s only a matter of time before we break out to the upside.
Keep in mind that it is the middle of the summer, and as a result there is a serious lack of liquidity. On top of that, we are just now coming out of what the markets were focusing on: the Greek debt crisis. Now that it’s behind us, we begin to look at fundamentals again. It could be relatively choppy in the short-term, but I do believe that we eventually start to grind higher.
