- The GBP/USD has rallied very rapidly during the trading session on Thursday, as we are now above the 1.2750 level.
- The British pound of course is getting a bit of a boost by the Bank of England not suggesting any loosening anytime soon, and perhaps more importantly, the Federal Reserve blinking during the previous session.
- After all, the US dollar continues to get eviscerated, we will see a bit of a “knock on effect” over here in the cable.
Ultimately, I think that you have more or less a “play on the dips” situation, and I do recognize that there is a certain amount of resistance near the 1.28 level, but I think if we can get above there, then we can see the market go looking to the 1.30 level above which is a large, round, psychologically significant figure. On the other hand, we do pull back from here significantly, I think there are several different areas that we can find buyers, especially near the 1.26 level.
Taking off
It’s worth noting that several other currencies have taken off against the US dollar, and I think at this point we will probably continue to see more of the same. Not only has the British pound taken off, but we have seen the Euro takeoff, the Australian dollar takeoff, the Canadian dollar takeoff, the New Zealand dollar attempt to, and on and on. I think at this point we are going to see the US dollar really start to get hammered, and there have been people out there calling for this for a while. However, it was not until Wednesday that the Federal Reserve came out and finally admitted that it was going to acquiesce to the desires of Wall Street and ignore inflation. (I’d be remiss if I didn’t say that was my statement, not theirs, but is essentially what they met.)
If that’s going to be the case, then it does make a certain amount of sense of the US dollar gets hammered. We may be entering a huge promo rally, but what happens if we enter recession? That typically is very bullish for the US dollar, but that’s probably a story for 2024 at this point. In the meantime, looks like the US dollar is going to be sold against everything.
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