At the beginning of the week, the British Pound was able to maintain its recovery against the US Dollar for a short time at the level above 1.3010. The exchange rate performed bravely and even tried to break the last high at 1.3050. But when the attack finally failed, the bulls closed their long trades. And then the rebound was already over. Since then, the British Pound has been weakening again and the price has been moving consistently downwards.
Yesterday the currency pair was able to hold above the 1.2970 level, but when the economic data from Britain was released in the morning, even this support could not save the Pound. Although the figures were positive and the British economy is still showing signs of stability, the Pound continues to depreciate against the US Dollar. This confirms how strong the US currency is currently against most pairs. Whatever happens, the US Dollar will prevail against the Euro, the Pound, and the Australian Dollar.
Will the Pound remain weak today?
Currently, the British Pound is just above the 1.2900 level against the US Dollar and the exchange rate is trying hard to defend the significant support. But the pressure on the downside remains. The bears are continuing to build their short positions and are doing everything they can to send the cable further down. As it currently looks, the price will continue to fall and the long-term downtrend will continue.
Since GBP/USD is one of the most volatile currency pairs, the chances for a successful short trade today are quite good. Should the 1.2900 “big figure” break sustainably, break-out traders will also jump on the moving train and profit from the short move. On the downside, the next important support for the Pound is waiting at 1.2871. Here the price may be slowed down for the time being, but the short trend is far from over. However, those who trade the downside today should keep this area in mind. It is worthwhile to work with a trailing stop in this situation, because if the support holds, the day traders will close their positions and a quick counter-reaction on the upper side may occur.
If the 1.2871 level should break, it will be really interesting because the next significant support is only visible at 1.2822. Until then, the risk-taking traders can hold their short positions. However, this could be the end of the road and it is recommended that traders close their positions at this level.
On the other hand, those who want to trade the long side today must be aware that they are going against the overriding trend. Of course, we can also take a small countermovement in the short term, but it remains rather the “dangerous” side today.
The Daily Pivot Point at the Pound vs. the US Dollar is only at 1.2952 – and in order to reach this level, the Cable would have to develop a lot more strength.
This afternoon, important economic data will be released from the U.S., which may also affect the GBP/USD exchange rate.
The analyses shown here do not constitute investment advice and are therefore not a recommendation to buy or sell a security, a futures contract or any other financial instrument. Past performance is no guarantee of future results. The analyses provided are for information purposes only and cannot replace an individual consultation. Liability for direct or indirect consequences of these suggestions is therefore excluded.