Get in there!!! GBP on fire and trending in line with the recent market expectation. How many times over the past 2 weeks have I said (and I am in good company) that as long as the UK outstrips the US and EU, GBP will be in focus and “the one to hold”.
We have opened this morning with UK (and the rest of the world) stocks rallying which in turn is giving GBP a lift. The high so far in GBP/USD has been 1.7182 and in EUR/GBP 0.7949 (1.2580). So for all intents my target of 0.7950 has now been reached, currently trading around 0.7960 as barriers at 0.7950 taken out. I am confident we have not seen the end of this rally, BUT PLEASE KEEP IN MIND BIG DAY TOMORROW there is NFP and ECB (+conference) which could shed some light on the next EUR and USD moves. Given this I expect the spot market to remain glued to the current range unless of course some unsubstantiated rumours start to surface about tomorrows meetings and numbers.
i noted in yesterdays commentary that EUR/USD is reaching levels which the market seeks to enter LONG USD positions. 1.3675/1.3725 is the area that has been touted. While I am happy to go along with this I personally think it might be a little too early to reverse positions and go long USD only because with the summer holidays about to start liquidity will somewhat dry up and moves will be more pronounced. Having said that I think we are likely to see a deeper rally in the EUR and it is not until August-September that I feel will be the “right time” to position for a move to 1.3000….
In GBP, well very hard to position against GBP strength. I do believe and I am sure I am supported on this view, that GBP will in all likelihood shed some recent gains as market makers take profit ahead on the long weekend (4 July) in the US. Tomorrow is likely to see a more pronounced move given the importance of the ECB and NFP events.
Have a good day ahead and good luck