The GBP/USD pair shot higher during the session on Wednesday, breaking above the 1.63 level. However, we did not manage to close above that level, and as a result this market isn't truly broken out yet. I feel that this market is going to continue to go higher, but there is a possibility that we need to see a pullback in order to build up momentum to break to the upside. Because of this, I am more than willing to buy a supportive candle at lower levels, especially around the 1.62 handle.
If we got a move above the top of the range for the Wednesday session, I feel that this market will head to the 1.65 handle. That area should be resistive as well based upon longer-term charts, and as a result I think it's more or less a short-term move waiting to happen. Whether or not we can get above there is a completely different question of course, but if we got above the 1.65 handle I see no reason why we will go to the 1.70 level.
Federal Reserve and the world loves the British pound.
The Federal Reserve of course will continue to be in focus as tapering off of the quantitative easing bond buyback program is still a major question waiting to be answered. After all, if they do taper off of that program, it should bring up the value of the US dollar overall. At the same time, the British pound is one of the favored currencies as far as the Forex markets are concerned, and as a result it should continue to be propelled against most currencies. The question about the Federal Reserve makes this particular currency pair. A little bit different, but ultimately overall British pound strength should continue to push this pair higher.
The one thing that could really send this pair back down is if the Federal Reserve explicitly says that it is getting ready to taper off of quantitative easing. That would cause a massive reversal in this pair as the US dollar would be bid up. In that particular case, I would be a seller. Otherwise, I am buying pullbacks that show signs of support, as well as a break of the highs from the Wednesday session.
