The GBP/USD showcased a mild rally during Friday's trading session, marking a significant recovery over the past 48 hours. The cooler-than-anticipated US jobs data played a role in weakening the US dollar against the British pound, especially considering the recent interest rate hike by the Bank of England. While this doesn't guarantee an uninterrupted upward trajectory, it does indicate that the British pound is exhibiting lively behavior against the US dollar. The English still see a lot of inflation, but then again, so do the Americans.
Beneath the current levels, the 1.2650 mark holds significant support, coinciding with the uptrend line. Despite potential market noise, the prevailing sentiment suggests that a push towards the 1.30 level is probable, given its psychological significance as a large, round figure. Chart patterns do not suggest an immediate pullback, and the formation of a hammer during the Thursday session indicates that traders were already positioning themselves for a potential uptrend. In other words, I think the buyers are becoming more aggressive at the moment.
However, it is important to consider alternative scenarios. If a breakout occurs and prices dip below the trendline, it could open the door to a move down to the 200-Day moving average, potentially reaching the 1.2350 level. Such a downturn would bring about significant selling pressure as long positions are closed, prompting a shift towards the US dollar for safety in a potential panic move. Although this scenario is not expected in the short term, sudden shifts in the market can occur, and traders should maintain reasonable position sizes to manage risk effectively.
- The British pound has displayed resilience, experiencing a modest rally in the face of cooler US jobs data.
- The Bank of England's recent interest rate hike has bolstered the pound's position against the US dollar.
- While the uptrend remains intact, traders should remain vigilant for potential shifts in market sentiment.
The 1.30 level serves as a significant target for the pound, but alternative scenarios could lead to short-term downside moves. Proper risk management and staying attuned to random central bankers speaking will unfortunately continue to be a major part of trading this pair. However, the momentum has shown itself to be the overall attitude of Cable. With this, the market will continue to try to get to that 1.30 level, and perhaps even near the 1.3250 level eventually.
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