- The British pound initially pulled back a bit against the US dollar in the early hours on Monday but has since really started to take off to the upside.
- As we are writing, we are threatening the 1.28 level, an area that I do think is rather important in this pair and extends possibly all the way to the 1.29 level as far as resistance is concerned.
- A lot of this was kicked off to the idea that PMI manufacturing a miss and actually showing a contraction, but it's worth noting that was the ISM numbers while the S&P Global Manufacturing PMI numbers came out better than anticipated.
So, I don't know how much momentum we're going to have here, at least based on that alone. Either way, Wall Street loves the idea of rate cuts under any circumstances, so that will probably get New York to sell the dollar.
Will the rest of the world follow suit?
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The question will be the follow through and whether or not the rest of the world goes right along with this with the 1.29 level being very likely to be a bit of a barrier. Underneath we have the 1.27 level that offers support and that is probably something worth paying close attention to.
Short-term pullbacks will almost certainly attract a certain amount of attention. And then after that, we have the 50-day EMA coming into the picture near the 1.2650 level offering support. So even though I'm not necessarily too excited about selling the US dollar, I do think this is more or less a buy on the dips type market. And the question now is whether or not GBP/USD can actually break out.
We could just chop back and forth. We've seen a lot of that in other major currency pairs, but that will remain to be seen. This has been the case in a few other ones that I watch, especially the AUD/USD, but at this point in time it certainly looks like everybody is trying to do everything they can to turn the market around and go positive in a risk sentiment type of move.
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