The GBP/USD pair exploded to the upside during the Monday session as the manufacturer PMI levels came out higher than expected. This gave a boost for the British currency, and as a result we saw the 1.60 level succumb to the buying pressure.
The hammer formed last Wednesday looks very supportive to me, and as a result I believe that the 1.60 level will offer support going forward. There is talk of the Federal Reserve adding to quantitative easing, or at least extending it, and as a result there should be continued pressure against the US dollar going forward. This will be especially true with the British pound as the economic numbers are getting better out of the UK.
I do see the 1.62 level is a bit of a resistance point going forward though, and as a result we may see a little bit of a pullback. This will simply be a buying opportunity in my opinion, and as a result I will not hesitate to add to my already long position.
1.62 And 1.63
As stated above, 1.62 is the next hurdle to overcome. However, the 1.63 level once the recent high that this market Saul based upon a breakout of an ascending triangle over the summer. This telegraphed of move measured for a game to the 1.63 level based upon the height of that triangle, which of course ended up coming true. Now we have to fight our way back up and try to test the level again. I do believe that we will not only reach that area, but we will also overcome it.
Looking into next year, I think that 1.70 is more than likely. With the Americans easing in an almost unlimited fashion, one has to think that there will be pressure on the Dollar going forward for the next couple of years. After all, the Federal Reserve is already promised low rates until 2015, and as a result money will flow out of the United States and look for returns in other countries with higher yields. The United Kingdom is most certainly in that category.