The GBP/USD pair has fallen quite a bit over the last several weeks if not months, and as a result I believe that we will continue to drop from here and reach towards the 1.45 level given enough time. I believe that the month of January will see a continuation of strength in the US dollar, and that the 1.50 level above will probably be rather resistive due to the fact that it is a large, round, psychologically significant number.
The US dollar is the favored currency around the world as far as Forex traders are concerned, and there remains quite a bit of concern for the world’s economic situation. I believe that the 1.45 level below should be supportive, and as a result we could bounce from there so I think that ultimately this market will be very volatile.
Still Favor the Downside
Even though I believe that it will be somewhat volatile during the course of the month of January, I believe that selling is easiest way to go in this market. On the other hand, if we do break down below the 1.45 level I feel that the bottom of fallout and the market will then reach towards 1.40 level. Whether or not we can get below there might be a bit of a different question, and I think at that point time we have to see whether or not the US dollar can continue the strength, and if it does things could get very ugly. At this point in time, I don’t believe it’s going to happen but I think that the month of January will favor sellers overall. I think that the beginning of the year in general is going to be good for the US dollar but we are reaching fairly low levels at this point in time so certainly the “easy money” has already been made selling the Pound.
