Pick of the Day: GBP/USD – Close Trade

Trade Adjustment: 2007-05-16 08:35

We have been entered short half position in GBP/USD at 1.9830. We have April housing data just released with Building Permits down 8.9% and Housing starts up 2.5%. With such a weak Building Permits number I look to close the trade at market because traders may view it as a leading indicator for future housing data.

Close trade at market 1.9825

Total: +5 pips
Trade Idea: 2007-05-16 00:18

Pick of the Day

What do we have tonight? Looks like price consolidation again as Cable is ranging ahead of a few key reports later today. Around 4:30 am EDT, the UK will release jobs data (Average Earnings Index, Claimant Count Change, and Unemployment Rate). At 5:30 am EDT, the Bank of England Inflation Report will be released. What to do?

The Inflation Report is key to Cable’s movement today as the market has probably priced in two more rate hikes by the MPC before the end of the year. Traders are ready to take profit on Cable, and this report may give them the excuse to start selling if the BoE’s outlook does not support the speculated rate hikes. If it does show an outlook of continued higher inflation, we should definitely see the pair rally against the Greenback, especially after today’s US inflation and TIC data.

So, we will have a long and short trade prepared in case we see either scenario.

Long half position GBP/USD at 1.9885, stop at 1.9865, pt at 1.9905

Short half position GBP/USD at 1.9830, stop at 1.9850, pt at 1.9810

Please remember to never risk more than 1% of your account on any single trade. Please adjust your position sizes accordingly.

Good luck and good trading!