Potential signal:
- On a daily close above 1.28, I will buy with a stop loss at 1.27, and a target of 1.3050 above.
The British Pound has skyrocketed against the US dollar over a full percent during the trading session as we are now above the 200 day EMA. It looks to me at least that the market is trying to price an interest rate cut due to the ISM manufacturing PMI numbers coming in cooler than anticipated but I also recognize that the bond rates have been crashing in America.
Top Regulated Brokers
I think this is something that's going to whipsaw the market because most of the leading indicators that I pay attention to are not showing the same reaction. So, with that being said, in the short term, I do think that the US dollar probably struggles, especially against the British pound, which has been stronger than most other major currencies anyway. And it'll be interesting to see if we can get above the level of 1.28.
On that Move Higher
If we can, then I think the pound goes much higher, perhaps to the 1.31 level. On the other hand, if we continue to fail in the same area we have, then it might be a bit of a holding pattern. This is going to be a very difficult market to trade in because there will be whipsaws along the way. Keep in mind that Friday is the employment announcement, and that of course has a major influence on how things play out as well. So be cautious this week, but it certainly looks like we're pro-British pound, at least for the time being. Underneath current trading, we have the 1.26 level offering support right along with the 50 day EMA. So, I think it all kind of comes together. There are a lot of questions to be asked about 1.25 as well. If 1.25 gets broken to the downside, that would obviously change a lot of things, and it would make the US dollar probably skyrocket against most currencies, not just the British pound, but right now there's no signs of that happening anytime soon.
Ready to trade our daily Forex signal? Check out the best forex brokers in the UK worth using.