The GBP/USD pair had a massive move higher during the session on Friday, breaking through the 1.65 level finally. However, we could not stay above that level, and that just shows that there is a significant amount of selling pressure above that handle. On top of that, I believe that the lack of liquidity had a lot to do with this move, and its subsequent pullback, so I do not try to read too much into the candle although it does look like a massively bearish shooting star. Ultimately, I think there is a reason why the British pound continues to gain against the US dollar, as well as almost all other currencies, so therefore I believe that we are ultimately going higher.
The 1.65 level will continue to be resistive, but I think it’s only a matter of time before we break above it. I believe that this pair is going to the 1.70 handle, but of course we have to clear that barrier first. On a daily close above the 1.65 handle, I am more than willing to start buying again, as this pair has shown just how resilient the British pound is. After all, the US dollars going quite well against most other currencies, but the British pound has been an absolute dynamo when it comes to the Forex markets lately.
Continued strength?
I believe that based upon the way the British pound has moved against the US dollar, the Swiss franc, and the Japanese yen, that the currency will continue to be one of the favored ones by traders around the world. Because of this, this particular pair is going to be a bit of an anomaly, as the US dollar will be the weaker of the two currencies. However, I also believe that the British pound is probably better traded against other currencies, but keep an eye on this particular pair because it of course shows how strong the Pound is. Even if you don’t trade this particular currency pair, you can keep an eye on it to perhaps gauge British pound strength and traded against other currencies that are extraordinarily weak, such as the Japanese yen.
