The GBP/AUD pair has been on fire lately, and the month of June of course was no different. With that being the case, I believe that this market should continue to go much higher, as we have broken the psychologically significant 2.0000 level. Anytime you break it parity level, that’s a big deal. I believe that the British pound continues to strengthen overall, and of course the Australian dollar is suffering at the hands of a soft commodity market and very little demand coming out of Asia when it comes to minerals and gold.
That being said, I think that every time this market pulls back a little bit, it will end up being a buying opportunity. I believe that the 2.0000 level is now the “floor”, and as a result this market should be one that you can buy again and again. I believe that the British pound is going to be one of the better performing currencies in the second half of the year, especially considering that we have broken out against the US dollar somewhat. That of course is the general measuring stick of strength, and as the Australian dollar looks so soft against the US dollar, by using triangulation I believe that this market continues to go higher.
Pullbacks represent value
I like buying the British pound in general, and I like match ended up against commodity currencies. After all, with the Asian economies slowing down a little bit, that will wreak havoc on commodity markets in general, and Australia in particular. Because of this, the market will probably remain a bit overheated, so that is why I actually prefer pullbacks but as you can see on the weekly chart, every time we fall buyers come back into play. I really don’t have a scenario in which a willing to sell this market, at least not until we break down well below the 1.98 level, and even then I would have to think about it. This is one of my favorite trades.
