- The British Pound got hammered on Thursday.
- When you look at the daily chart of the British Pound, you can see that we started selling off right away on Thursday.
- It's probably worth noting that the bonds in Great Britain have seen a spike in yields.
That seems to be causing some concerns with the United Kingdom overall. That being said, the British Pound is still in my estimation, second best when you're talking about currencies that you'll be trading. So, while the British pound is going to struggle against the US dollar, I don't necessarily like the idea of shorting sterling against everything. I think you have to be very selective about it. That being said, the Friday session features the non-farm payroll announcement in the United States, and that obviously will have a major influence on volatility and what's going on with the US dollar in general.
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Caution is Necessary
So, with that, you have to be very cautious. But what I'm hoping for is to see this market bounce a bit so that I can step on it and start shorting again. I'd be very interested in shorting near the 1.25 level if we get that high, but we may only get a bounce to the 1.2350 level. You will just have to watch the action to see how it behaves.
All things being equal, I think we have a scenario where traders will continue to look at this as a market that is going to be very volatile and favor the greenback, but that doesn't necessarily mean that this is a market that you want to sleep on. I think although the British pound is weaker against the US dollar, a lot of times you can use this chart as a gauge for something like pound against Swiss franc or pound against Canadian dollar. As long as the chart looks like this though, it just goes to prove the only thing you really can own in the Forex world right now is the US dollar, and if we break down below the bottom of the candlestick from the trading session on Thursday, look out below we could be looking at a move down to 1.20. And that actually I think will happen given enough time. But I do expect the British pound at least put up somewhat of a fight. So, look for cheap dollars, look forward to bouncing a bit and then show signs of exhaustion before you start selling.
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