British pound bulls were slapped down on a combination of increased risk aversion and comments from BOE Governor Carney! GBP/CAD dropped and took me out at my adjusted stop!
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A lot going on for sterling traders today, and like my main man Pip Diddy commented on in his London session recap, it was thanks to risk aversion and mainly, Bank of England Governor Carney’s speech in Davos this morning.
The short story is that he re-iterated what was said in the BOE meeting minutes released this week, that hitting 7% in the unemployment rate is not an automatic trigger for an interest rate hike. He also mentioned that recent pound strength could hurt U.K. exporters. We saw a sterling sell off on the event, with GBP/CAD dropping from its high’s around 1.8550 to its current levels around 1.8270. The market hit my adjusted stop at 1.8350 and took me out of my trade.
Total: +271 pips/ +0.91% gain
Not a bad return, but I gave back a third of my profit on that pullback from 1.8550. I don’t usually follow the speeches in World Economic Forum in Davos carefully, so I think the one thing I could do differently in the future is to be more aware of this event and adjust risk accordingly to avoid a strong negative reaction like what we saw today after Carney spoke. I don’t think they’re usually market makers, but as the saying goes, “be ready for anything!”
I’ll continue to watch this pair to see what it does between 1.8100 – 1.8300. If it consolidates and support behavior appears, I may go long again. If it doesn’t, and the sterling selloff finds legs, I just may go short. We’ll see what happens.
That’s it for me today. Thanks for checking out my blog and have a great weekend!