GBP/USD fell precipitously on Wednesday as the Bank of England minutes discussed more easing for the United Kingdom going forward. The Pound fell against all currencies, and the Dollar was no exception. The 1.59 level held as resistance again, and the area looks like it is going to continue to keep prices down going forward.
The 1.5650 to 1.57 level continues to hold as support to this point, but the level could kick off the next leg down if we break lower in this pair. With the headline driven markets we can expect plenty of volatility in this pair. The pair is always risk sensitive, and should continue to be heading into the future.
The reaction to the European deal with the Greeks has been muted at best, so there is a real chance this pair falls. However, a break of the lows from Wednesday would be needed to be convinced of this, and it is this that we are waiting for to sell this pair.
The weekly shooting star form a couple of weeks ago still serves as a reminder of the downtrend, and we are planning to adhere to that line of thinking. The 1.60 level would have to be overcome in order for us to change our minds, and at this point in time it looks as if we aren't able to even get high enough to seriously challenge that area. The easing in Britain should continue to weigh upon the Pound, and the Dollar will continue to get a boost by the growing US economy. The fact that the Americans are actually growing in a very weak global situation should continue to see money flow into the United States.
The breaking lower of price sends us short in this market, if we see a bounce at this point; we are willing to fade rallies at this time closer to the 1.59 level. The pair looks as if it is going to consolidate, or fall in the end. Going forward, it is difficult to see this pair rising significantly.
GBP/USD Forecast February 23, 2012, Technical Analysis
GBP/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3