Pick of the Day: GBP/USD - Trade Closed
Trade Closed: 2007-06-07 11:50
The Bank of England's Monetary Policy Committee kept rates unchanged today. As expected, Cable dropped on the news and temporarily found support at our entry point at 1.9850. But with traders flocking to the dollar on a "flight to safety" response on the North Korea event, the momentum was strong enough to break through.
So, we struck out again on this trade, but I am still bullish on this pair. I am going to watch 1.9800 and possibly jump in long Cable if it hits. For now, we took a small hit of -40 pips.
Trade Idea: 2007-06-07 01:00
While we let our EUR/USD trade marinate, we will turn our attention to today's market focus - the Monetary Policy Committee's interest rate decision. Economist's are expecting the MPC to hold rates at 5.50%, but we've seen in the past how they can surprise us with a hike here and there.
Of course, if we do see a surprise, Cable will rally back up to the 2.00. If they hold, the pair may retrace on it's recent rally on profit taking, but I see it as an opportunity to jump in long as the longer term trend is up, and the interest rate differential is slightly in the Pound's favor. Here are a couple of trade ideas:
Long half position GBP/USD at 1.9980, stop at 1.9930, pt at 2.0030
Long half position GBP/USD at 1.9850, stop at 1.9810, pt at 1.9900
Remember to never risk more than 1% of your account on any single trade. Adjust position sizes accordingly.
Good luck and good trading!
