The earlier spike in the pound was as much due to the prevailing thin liquidity conditions triggering stops and we’ve now seen a retreat as European traders get their feet under the desk.
I noted in my earlier post that there was definitely a case for selling into that rally but at the time it was still consolidating and then had the other house price data spike to add further support
GBPUSD has since come down to 1.6080 from 1.6120 and EURGBP to 0.8390 from 0.8375. Similar story in other GBP pairs.
Sell the rally still ? Yes, unsurprisingly I think so and prefer that side still. Plenty of offers between 1.6150-1.6250. But equally there’s a case for buying the dips. Yesterday’s drop from 1.6095 to 1.6027 after the GDP and c/a data, and this morning’s spike to 1.6132 from 1.6068 pre-Carney show just how evenly balanced the argument is.
And equally how unconvinced/nervous the market remains.
