Good morning forex friends! GBP/USD has been in consolidation mode for a couple of months now, but we finally got a breakout last week. Will we see a move higher?
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Today, I’ve got a straight forward idea to go long on Cable on a pull back. As I previously mentioned, the pair has been ranging between 1.5900 – 1.6250 since the beginning of October and last week we saw a break of the top of that range on broad Sterling strength. The UK has been one of the strongest economies this year among the majors, and with the outlook continuing to look pretty rosy from here, this breakout may be the real deal.
Now I’m going into “watch mode” for now as this week’s forex calendar is packed with tier 1 events, notably the Bank of England’s monetary policy statement and US jobs data. We’ll probably see no changes to policy from the MPC and positive rhetoric on the UK economy, but the crapshoot is the US jobs data. A December Taper from the Federal Reserve is still in the realm of possibility and this event could be the key as to which way they may decide. Needless to say, both events could be volatile, probably the last big ones for 2013.
So, I’ll be watching Cable for a buy around 1.6250 if the story and market behavior supports a further rally higher, and until then, I’ll keep my eyes open for some short-term opportunities; revisiting my my USD/CHF short idea may not be a idea!