GBP/USD Technical Analysis
The British pound looks sick, quite frankly. If we break down below the 1.3150 level, then I think the bottom falls out. We go looking to the 1.27 level. We are hanging around the 200-day EMA, and I obviously believe that the FOMC interest rate decision, or perhaps more importantly, the press conference after that, will drive where the U.S. dollar goes next, which obviously will drive where this pair goes.
We do not have an interest rate decision coming out of the United Kingdom this week, unlike the European Central Bank. So, I think this is going to be all about the U.S. dollar. Short-term rallies, I think, open up the possibility of short opportunities at the first signs of exhaustion.
EUR/GBP Technical Analysis
Looking at the euro against the British pound, we continue to rally quite nicely as we are now threatening the 0.88 level. Short-term pullbacks should end up being buying opportunities, but keep in mind that we have the European Central Bank with its interest rate decision on Thursday that would cause some volatility. It looks like the 0.8750 level will be a bit of a floor in this market, so a pullback from here is going to turn around and bounce quite nicely.
I’m looking for dips as value. I don’t have any interest in shorting this market. Breaking above the 0.8750 level opened up the possibility of a move to the 0.89 level based on the measured move of the previous consolidation area.
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