The GBP/USD pair initially fell during the day on Wednesday, but found enough buyers just above the 1.52 level to turn things back around and form a hammer. The hammer of course is very bullish, and the fact that the hammer formed suggests to me that the British pound is going to continue to find buyers every time the market dips. With that being the case, I believe that a break of the top the hammer is a nice buying opportunity, and I think that we clearly have a target at the 1.55 handle. That is an area that could be rather resistive, but ultimately I believe getting above there probably sends this market to the 1.58 handle next.
Interest rate decision
Today features an interest-rate decision out of the Bank of England, and that of course is a major market mover. However, it appears that the market has basically made up its mind at this point in time, and as a result I think that we are seeing a precursor to how today may turn out.
Ultimately, even if we pull back after the announcement, unless we make a fresh, new low, which is essentially just below the 1.52 handle, I believe that it could be a nice buying opportunity as it offers the British pound “on the cheap.” However, we could possibly break down below the recent low, and if we do I feel that the market will probably drop down to about 1.50 again.
That being said, I think one thing we can count on is a bit of volatility, as interest-rate decisions tend to do that. One thing I can say though is that it looks as if the US dollar is starting to sell off in general, and with that I feel that it’s probably only a matter time before the British pound starts to strengthen against the US dollar, but I of course need some type of confirmation for the longer-term move. In the meantime though, I think buying is the only thing you can do.
