Pound (GBP) Nearing Support!
The British pound (GBP) is holding up fairly well considering the strength of the US dollar and the overall market conditions. Risk out of the Euro zone due to the inability of leaders to provide a credible solution to the debt crisis is still fairly high, yet the UK continues to report positive economic data.
Today’s employment report is one such metric, as was yesterday’s lower CPI data. The BOE has been erring on the side of caution and have been accomodative in terms of monetary policy, but not like what we are seeing in the US and likely the Euro zone.
So despite the “easy money” of the BOE, the UK remains a better alternative for European money flows as they appear to be moving in the right direction. The safety of the Swiss franc has been attacked by the SNB who are holding their rate policy meeting tomorrow. The target rate for the Swiss franc is essentially a peg and has made it a less desirable currency for fear of further intervention.
This leaves the Pound as the “beneficiary” of these money flows, though currency strength is seen as a bad thing in this race to the bottom. The Pound has been climbing steadily vs. both the Euro and Swiss franc and has been holding up fairly well vs. USD.
As we near double bottom support on cable, I’m looking to buy at support and place a stop just below support. So I am looking to get long around 1.5425, with a stop just below 1.54. The hope is that we can return to the at least the middle of the range of 1.56.