Potential signal:
- I am buying here.
- I would have a stop at 1.3140 and a target of 1.3450.
- The British pound continues to see a lot of support just below current levels, as we are at the bottom of a range that we have been in for some time now. Technical analysis suggests a bounce is due.
GBP/USD
The British pound jumped slightly against the U.S. dollar during trading on Tuesday as U.S. yields rolled over ever so slightly. At this point, this becomes a very intriguing currency pair because the interest rate differential was pretty much non-existent.
We are at the bottom of a larger consolidation range, basically 1.3150 at the bottom to roughly the 1.3650 level at the top. As we are in this area, I cannot help but start to look at the stochastic oscillator, and we did just crossed into an oversold condition.
Top Regulated Brokers
The buyers are coming in to kick this back to the upside.
All things being equal, this could end up being a very intriguing opportunity to short the U.S. dollar. The U.S. dollar is overbought against multiple currencies, not just this one—for example, the Canadian dollar, which I just did some analysis on for you here at DailyForex.
This would not necessarily be the end of the world. It would just be a continuation of the pattern that we have been seeing for quite some time. If that is the case, it is just steady as she goes. We will have to wait and see.
Interest rates come into play, but this is a pair that is a little different in the sense that the differential has not been as wide as, say, the dollar against the Swiss franc. Great Britain is in a steady-as-she-goes pattern as far as interest rates are concerned, and we have the same thing here in sterling against the U.S. dollar.
Ready to trade our daily Forex GBP/USD analysis? We’ve made this UK forex brokers list for you to check out.