Potential Signal:
- I am a buyer of the British pound. I am comfortable going into the market here, with a stop loss at 1.3240 underneath.
- I’d be aiming for the 1.35 level at the very least.
- The GBP/USD pair is likely to continue to see a lot of noisy behavior, but I think at this point in time we have a lot of support underneath that will continue to come into the picture, reaching around the 1.33 level for buyers, as well as quite a bit of support underneath that the 1.3250 level.
- This is an area that I think will continue to be a very important level to pay close attention to, as it was significant resistance in the past, so therefore I think we have a lot of “market memory” come into the picture.
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All things being equal, this is a market that has been very strong, and I think pulling back here simply makes quite a bit of sense that we could see buyers looking to come into the picture in order to find value. The British pound of course is a currency that a lot of people have been paying close attention to due to the Bank of England and its steadfast monetary policy, I like the Federal Reserve which recently just fell apart as far as its moxie is concerned.
Federal Reserve
The Federal Reserve of course continues to be a major driver of where we go next, as Jerome Powell just cut interest rates by 50 basis points, which generally means that we are about to see something very ugly, but we don’t know necessarily when that happens. If and when that happens, the US dollar becomes very attractive, and therefore I think traders will have to be cognizant of the fact that the market could very well see a run into the US Treasury markets, as the treasury market tends to be one of the safest places to invest generally speaking.
The size of the candlestick is rather negative, but as we have seen so much in the way of upward pressure, think it’s probably only a matter of time before we see value hunters come into the picture and try to pick up again quote cheap British pounds.” With this being the case, I’m looking for a buying opportunity.
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