Looks like Cable is making a higher pullback! My second entry order on my GBP/USD trade idea just got triggered as pound bulls are charging for now. As Pip Diddy mentioned, the recent rally in sterling may have been spurred by a bit of political clarity in the U.K. now that Theresa May is set to become the next Prime Minister.
Still, the longer-term downtrend on GBP/USD seems to be intact as price has yet to encounter several resistance levels before reversing from its selloff. There’s still a considerable amount of uncertainty left in the U.K. economy as the new leadership is prepared to play hardball with EU officials in Brexit negotiations.
Besides, the BOE is scheduled to make its monetary policy decision later on this week and additional stimulus efforts are expected from the U.K. central bank. BOE Governor Carney did confirm that they’re ready to ease in order to keep the economy supported throughout this Brexit process so market participants are counting on an interest rate hike then.
For now, my Cable trade is in the red but I’m not too worried since I’ve got a wide stop all the way past the 1.3500 handle. This way, I have enough room to close early and cut losses if the pair undergoes strong bullish pressure and breaks past the swing high – a scenario that could take place if the BOE decides to hold its fire and wait for the August meeting to cut.
As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.