The first half of the North American trading day has been either really good, or really bad depending on your point of reference. While European and Asian equities surged to significant levels earlier today, US equities have largely been morass and have drifted lower since the open. Commodities are also falling with Gold edging below the $1200 level and WTI cratering toward the $50 level as Wall Street heads to lunch. In contrast, the USD has been the star of the show thus far as most other currencies are once again bowing to King Dollar after the weekly release of Initial Jobless Claims fell to its lowest level in nearly 15 years.
Despite the USD love affair the market seems to be encouraging this morning, there has been a lot written about the GBP here on the pages of FOREX.com, and for good reason. The Bank of England made their monetary policy decision today which offered neither changes to their interest rate, nor any statement explaining their reasoning, per usual. The UK elections are creating a bit of uncertainty as well which has the GBP on edge and most prognosticators looking at the currency in a negative light. Over the long term, it makes sense to look at the GBP as a shorting opportunity as uncertainty typically engenders weakness, but more immediate movements could be counter to that doctrine.
One currency pair where the potential for a bounce back to good for the Pound Sterling may lie in the GBP/NZD. The pair has corralled around a round number (1.95), which could have psychological effects and act as support. In addition, a Fibonacci-based Bullish Gartley pattern has completed in the same region, providing another supporting argument. Fundamentally speaking there isn’t really anything scheduled for release out of New Zealand to trigger Kiwi strength or weakness, but China will be releasing some inflation data that could have a tangential effect. Despite that fundamental factor, the technical aspect may end up being more significant. Therefore, even though the overall feeling may be that the GBP will be the dimmest bulb in the currency chandelier, it may shine brightly for a fleeting moment before it gives way to larger overarching concerns.
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