The GBP/USD pair fell hard during the Friday session as there was no nonfarm payroll number announcement to get in the way of the US dollar. However, the market did stop just above the 1.60 handle, but at the same time close at the very bottom of the daily range. This of course is a very negative sign, but we are sitting right on top of significant support.
The Bank of England has an interest rate announcement later this week, so it's very possible that the markets are simply trying to take risk off the table before that comes out. However, I still feel that there is enough in the way of support at this general vicinity in order to see buyers step back into the marketplace but we do not have the right candle quite yet.
Once we get the jobs number, that could fuel the Pound
It's my firm belief that the jobs number out of the United States will be dollar negative, and as a side note this should propel the Pound higher unless of course the Bank of England shocks everyone and starts announcing further monetary easing. However, the central bank in London really is somewhat back in the corner as monetary easing seems very unlikely at this point time.
Another thing that I noticed on this chart is that there is a gap down near the 1.59 handle, so I believe that there is a zone of support between here and there. Because of that, I'm not going to be too hung up on whether or not there is a supportive candle right at the 1.60 handle, and quite frankly would be comfortable taking a supportive candle all the way down to the 1.5750 level which I see is very potentially supportive.
I believe that the US dollar will be weak for the next couple of months, especially against European-based currencies. With that in mind, I fully expect to see this pair continued to climb but a pullback at this point in time quite frankly is going to be healthy for the buyers. That being said, I am watching for that buy signal.
