The GBP/USD pair broke down slightly during the session on Friday, in a fairly quiet trading environment. After the surge higher on Thursday, the pullback was very minimal and as a result I feel like this market is going to continue going higher next. It might need to pull back slightly, but it should find plenty of support near the 1.53 region. From there, I would anticipate a move to the 1.55 handle, which was previous support and should now be fairly resistive.
With that being the case, I feel that the market should ultimately fall from that area and head back towards the 1.52 handle. I believe that before it’s all said and done we will establish some type of range between 1.50 and 1.55. After all, the British pound is doing fairly well but the US dollar is the favored currency around the world. Unlike most other currencies though, the Pound has stabilized against the greenback recently.
Look for value
Look for value going forward. I think that every time the US dollar sells off, you have to think about picking it up based upon that reason alone. After all, the greenback continues to be the favored currency around the world based upon central bank expectations in basic economic announcements. The other major currencies that we trade against the US dollar are generally softer, and I believe that overall the bounce in this pair is part of a larger pullback in the value of the US dollar that will lead to more bullish momentum.
Even beyond that though, I see a significant amount resistance all the way to the 1.58 level, starting at the aforementioned 1.55 handle. In other words, it doesn’t really matter if we break above the 1.55 level, as there is so much noise above there. That would be a very difficult barrier to climb over, so at this point in time I am simply sitting on the sidelines and waiting for a selling opportunity in a market that is most certainly still in a downtrend overall.
