The GBP/USD pair broke down significantly during the week, especially after the jobs number came out of the United States that was much more bullish than anticipated. We pulled back, but we are testing the downtrend line off the daily chart and have sat still in this general vicinity. I believe that if we can stay above the 1.28 level, the market will more than likely bounce given enough time. Alternately, I believe that if we can break above the 1.3050 level, the market should then continue to go towards the 1.3450 level which is a potential longer-term target. The biggest problem with trading this market is that longer-term we have had a lot of headwinds in both directions, and of course we have headline risk almost daily.
London and Brussels
There are a lot of possible headlines coming out of both London and Brussels involving the divorce between the United Kingdom and the European Union that could move the British pound. I think that given enough time the markets will have to make some type of significant move, but it appears that we are still a bit hesitant to put longer-term trades into play as there are lot of potential problems. If we do break above the 1.3050 level, I think at that point it will show that the market believes that the British pound is going to continue to go higher, and perhaps that the Bank of England will have to tighten interest rates sooner than originally thought as it has been handed from time to time recently. Either way, pay attention to these 2 levels to make your next trade in the cable market, as the choppiness will probably be an issue, you should probably consider keeping your position size small.
GBP/USD Video 10.7.17
This article was originally posted on FX Empire