The GBP/USD pair broke higher during the course of the day on Thursday, and even broke above the top of the shooting star from the Wednesday session. With that being the case, it appears that a lot of traders are trying to “front run” the Scottish Independence Vote. With that being the case, the market should be leaning towards a “No” vote. That would keep the Scottish within the United Kingdom, and as a result I believe that the British pound would continue to gain strength as there would be a bit of a “relief bid.”
I think that the 1.66 level is the resistance barrier above that we will have to contend with on a positive move, but I would not be surprised if we ended up slicing through that level with relative ease. After all, a lot of this selling has been in reference to the vote, and a return to the status quo and a squelching of Scottish independence could in fact have a very violent reaction in this pair.
Front running, quite common to see.
This is simple front running as far as I can tell, and quite frankly that’s simple to see. The fact that all of a sudden the British pound is starting to gain a little bit of upward mobility suggests that those who have deeper pockets than the rest of us should continue to prefer the British pound, as they have the ability to take the risk of the vote going the wrong way.
On top of that, there’s the possibility that the large amounts of selling opportunities that were taken due to potential Scottish independence are being reversed simply as a precaution, as the vote turning back against them and shooting the value of the British pound higher could of course be catastrophic for several trading positions. Obviously, there has been a lot of money put against the British pound, so with that it’s likely that the market could have a very violent move to the upside, at least that’s what I’ve been banking on.
