Back again and things are about to get hot with the AHCA voting taking place today. Trump and GOP want this to sail and Sean Spicer was confident that their plan will work out. It all depends with the sentiment and what American’s representative in Congress feel about the AHCA. Anyway, this is a political event that can change the bearing of the USD and affect the trajectory of the market. A lot of fund managers suggest that the current USD weakness is coming to a halt all because of the recalibration and shift of portfolio. More fund managers are shifting to equities and decreasing their cash holdings. A stronger economy means equities are stellar and bond traders are reprieved from the all time low interest rates. This stronger economy should be reflected by the stronger USD and that is why I’m unloading the GBP today. Brexit is still on the cards and the net effect of that is a low Pound.
A look at the charts shows that GBP has reversed and recouped 70% of what it lost last month. It is now at critical levels of resistance with 1.2560 being one of them. This is also the same level of trend line resistance between December 2016 and January 2017 highs.
For this reason and support from empirical data shows that the GBP is slightly overextended unless there is something substantial, the Pound should retrace.
Trading should be as follows:
Stop Loss: 1.2560
Take Profit: 1.2460-Today’s lows before UK’s Retail sales announcement.