- In my daily analysis of the GBP/USD pair, the market looks as if it is going to continue to go higher, and you can also make an argument that we are forming some type of bullish flag or possibly some type of pendant.
- This suggests that we’ll likely continue seeing buyers enter the market to capitalize on value, especially after the recent surge.
- Such momentum rarely happens in isolation, which typically indicates further gains in the long term.
Ultimately, this is a pair that will continue to be paying close attention to the Bank of England, because we already recognize that the Federal Reserve is likely to cut rates during the month of September. If that’s going to be the case, then it does make a certain amount of sense that the British pound should continue to be stronger than the US dollar, but we also have to keep an eye on risk appetite. If risk appetite finds itself drifting lower, that will certainly cause the US dollar to strengthen as traders run back into the treasury market.
Bank of England Decision
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We are roughly 2 weeks away from the next interest rate decision from the Bank of England, and that is probably what most people will be focusing on in this pair, apart of course from the Federal Reserve itself. With that being the case, I like the idea of taking advantage of a market move to the downside that shows some type of bounce. In other words, I am buying the dips in this pair as it is still bullish. I don’t have any interest in shorting the market but I would be the first to admit that if we were to break down below the 1.30 level on a daily close, that could end up being a very negative sign indeed.
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