The GBP/USD pair finds itself at the bottom of the overall range that we have been in for quite a while.
GBP/USD
The British pound has fallen during the trading session against the U.S. dollar as we continue to see a lot of noisy sideways action. This is a pair that has been in a range for some time, and so far, we are looking like we are still trying to respect the overall structure of the market that we have seen previously.
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Quite frankly, the interest rate differential is favoring the British pound ever so slightly, not enough to make a difference. As we are at the bottom of this range, I do think that there is a certain amount of demand that extends down to the 1.3150 region. I do think value hunters are probably looking to get involved here, assuming all things being equal.
US dollar is the driver
This market will continue to more likely than not move on the dollar, not so much the pound and what's going on with rates in America. If we can get the 10-year yield dropping off a bit in the United States, that could lend a little bit of credence to a sideways market.
The market, I think, eventually will continue to believe that we're just at the bottom of a range we've been in for the better part of a year. With that being said, I do like buying if I get the right setup. The setup, of course, will be found in the bond markets, not the charts, so keep that in mind.
Given enough time, one would assume that the same buyers are there. The fundamental layout hasn't changed much, so I am just looking for confirmation in the U.S. bond market—falling yields—to start thinking about buying.
If we break down below the 1.3150 level, then we could go looking to support near the 1.30 level. This would be a major selloff, but more likely than not be tied to the US dollar rallying all over the place, not just here.
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