The British pound got absolutely hammered during the trading session on Thursday as the Bank of England has decided to pass on the idea of raising interest rates. That being said, it is possible that they do it relatively soon anyway, it just seems that perhaps the market was trying to price those hikes in ahead of time. The 1.35 level has offered a significant amount of support, and the most recent bounce from that area was rather impressive. However, we also have the jobs number coming out on Friday, and that of course would have a major influence on what happens here.
The size of the candlestick is of course very impressive, but at this point in time I think if we turn around and show signs of life, it is possible that we could go higher. However, if we were to break down below the 1.34 handle, and then it could open up a major breakdown. The 1.34 level has been somewhat important, so if we were to lose that, this is a market that will fall apart and go much lower. At this point in time, it is likely that we have a lot of questions asked during the day on Friday, and therefore I think that by the end of the day we should have clarity for the bigger move.
If we turn around and take out the top of the candlestick that we just formed during the trading session on Friday, that would be an extraordinarily bullish sign. At that point in time, the market would likely to go looking towards 1.39 level, and then eventually the 1.40 level. Nonetheless, this is a market that I think continues to see a lot of shakiness, so if I was to short the US dollar, meaning buying another currency against it, I do not know that the British pound would be the one I would use. Quite frankly, we probably have more of a chance of some of the commodity currency such as the Australian dollar or New Zealand dollar taking off to the upside. That being said, the market is likely to see a lot of serious questions to come into the picture, as the Thursday session left a lot of questions out there going forward, perhaps even more than we had to begin with.
