The GBP/USD pair broke down during the session on Friday, as the US jobs number was much better than anticipated. This being the case, the market broke down below the vital 1.52 level, and of course the noise and support just below there. With that, we ended up forming a very bearish candle and heading towards the one place that would offer a bit of support, the large, round, psychologically significant number. This of course was the 1.50 level and as a result I think that we may get a short-term bounce. However, that bounce is certainly not something to get excited about and I look at that as an opportunity to sell this market at higher levels. Any signs of exhaustion between here and the 1.52 level is tantamount to a selling invitation as far as I can see.
Breaking down
It appears that the European currencies are breaking down again, and the British pound isn’t the only one. That being said, I think that the US dollar will be favored going forward, as it is the only economy that seems to be at least somewhat normal at this point. The central bank situation in both England and America find themselves at odds, as the British have suggested more quantitative easing could be coming, while the Federal Reserve may be forced to raise interest rates quicker than they thought. With that, the markets of course are starting to bet on the Americans raising interest rates before the English, and quite frankly that’s probably not too far out of line.
With this, I don’t really have a scenario in which I’m buying this pair, but I do recognize that there will be times where it goes higher. If we can break down below the 1.50 level, I feel then that we go to the 1.45 handle over the next several sessions, if not weeks. Regardless, it certainly looks as if the sellers are in control at the moment.
