Sometimes it’s really hard to write a post about a topic I wrote so many times before. I’ve just recently posted an update on the USD view focusing on the EURUSD pair. Even though I am writing about the pound sterling today it goes hand in hand with the bearish US dollar thesis because the cable is arguably the most important GBP pair.
Two weeks ago I tweeted “Anyone else thinks this is likely? $GBPUSD” suggesting that I am expecting a resolution higher in price.
— Domen Butala (@DomenButala) November 16, 2017
At that time everyone was calling for the dollar to rally and consequently the pound to fall apart. So far it is trying to resolve as expected and is already 200 pips higher.
But more fascinating chart is not the cable, it is the equally weighted GBP index against AUD, CAD, CHF, EUR, JPY (div by 100), NZD and USD.
If the index confirms the breakout above the resistance at the current level and stays above, it will be really hard for me to be bearish the pound.
For those who only have access to individual pairs I think this thesis is valid while GBPUSD stays above 1.32-1.33. In this case I wouldn’t be surprised to see the cable at 1.40 in the months to come.