- During the trading session on Thursday, we have seen the British pound dropped fairly significantly against the US dollar after the Bank of England chose to cut interest rates by 25 basis points.
- However, what’s more interesting is they also sound like they are going to continue to cut, so I think ultimately this works against the value of the British pound overall.
However, we also have to keep in mind that the US dollar has a major influential event during the Friday session in the form of the Non-Farm Payroll announcement, so it’s probably not a huge surprise to see that we have been recovering as the Americans got to work. Ultimately, this is a scenario that means a bit negative, but at the end of the day, we also have to keep in mind that the jobs number could change everything in a flash.
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So Far, the Trend Remains
It’s interesting to see that the 50 Day EMA held as resistance, but perhaps more importantly, the 1.25 level has. Ultimately, this is a market that is in a major downtrend, and despite the fact that we have seen a vicious bounce over the last couple of days, you can see just how quickly things turned on a dime during the trading session on Thursday. In other words, there’s no real conviction to the upside in my estimation. This could change after Friday, but I would be hesitant to go along with that.
As things stay the same, I tend to look at this through the same prism. In other words, I prefer shorting this market, but I also recognize that you need a bit of a bounce in order to do so. That’s exactly what happened heading into the Bank of England decision, so it was a perfect set up. At this point, we need another catalyst, and that might be the jobs market. If the jobs number comes out above the expected 169,000, that could very well end up being the catalyst.
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