By: DailyForex.com
The GBP/USD pair fell during the course of the session on Monday, breaking down and heading towards the 1.50 level. That of course is a large, round, psychologically significant number, but at the end of the day we have broken down below there recently so I don’t think it will be as big of a deal this time. Because of this, I feel that the longer-term downtrend is going to continue, especially as we are starting to reach towards the 1.49 handle.
I think that rallies at this point in time should continue to be selling opportunities, and that the 1.52 level will continue to be a bit of a ceiling in this market. You have to keep in mind that the US dollar is the strongest currency in the world, the trend is most certainly to the downside, but we have seen quite a bit of volatility. Bounces like this have systematically been sold off again and again, and at this point in time I don’t see anything that changes that attitude.
1.45
I think that as long as we can keep the downward grind going, we should reach towards the 1.45 handle. I don’t think it’s going to be easy, and I do think that it’s going to take a bit of time to get there. I think that the downward pressure is continuing into the holidays, as the British pound simply doesn’t look that strong. We also have the Federal Reserve more than likely not only going to raise interest rates, but may have to make a statement on whether or not they continue to do so. If there’s any hint whatsoever at them doing that, you can count on the US dollar strengthening going forward.
On the other hand, the Bank of England most certainly isn’t going to be raising interest rates anytime soon, and as a result this should continue to be a market that grind lower. It’s not necessarily like the Federal Reserve is going to raise interest rates rapidly, so “grind” is probably going to be the key word.
