It seems to me that the bulls are still safe. Despite the stalling at highs 2 weeks ago and the inevitable selloff this week, sterling looks well-poised to begin its move higher from current levels. The charts look great with the selloff in $GBPUSD right into 1.6950; and the rally in $EURGBP capped by 0.7950. If these areas of support for sterling hold, it could be off to the races as sterling pushes higher again. But has there been a fundamental change that would support further GBP weakness? This rally has been fueled, first, by economic growth and, now, by interest rate hike expectations. The market will, however, pay attention if the data misses reported throughout this month become a trend. And such a trend will temper the market’s expectations for interest rate hikes. What happens when the BoE decides instead to taper its QE program? Or if the $FED does raise interest rates? How safe really is this GBP rally? Consider it is safe for now.
- Don’t hold your breath (The Economist)
- 3 Takeaways from the BOE Meeting Minutes (Baby Pips)
- Risks to sterling may not be appreciated (FT)
- EUR Not A Safe-Heaven; GBP Is The New CHF – Morgan Stanley (eFXnews)
- Great British manufacturing is rising from the ashes (Forex Live)
- GBPUSD monthly (StockTwits)
- GBPUSD Aiming at 1.73/1.74 zone (Twitter)