GBP/USD moment of truth is here. What brought us to present 1.6300 levels was a steady rise in UK interest rates supported by 2 year Gilts since last February in a more healthy UK repo market. This situation would wholly explain consistency in great UK economic data and GBP's rise. Its a fascinating insight how this works but more importantly is why wouldn't Carney take the job. Its literally a no brainer decision since the UK is working wonderfully on all cylinders.
Now UK interest rates currently sit 0.001 above yearly averages while 2 year Gilt yields sit at 0.427. Gilts in terms of overnight Bank Flow Reports hit stratospheric purchase levels all week so our rally may be in for a correction. If the 2 year Gilt Yield falls below 0.425 thereabouts and interest rates drop below current prices, the big GBP short is here. Inversely, if levels hold, we go higher. I fault again these idiotic analysts abdication of their responsibilities to not bring this info to all at fxstreet dot com and dot net.
Levels to watch today is the range between 1.6332 - 1.6246. What separates this range is an MA line at 1.6290 that decides Long/Short. Higher prices must break and hold exactly above 1.6332. That occurrence allows a clear path to 1.6637 and 1.6647. A failure to break and hold may see a test to 1.6045. Look for the range 1.6332 - 1.6246 to hold today but watch closely the 11 - 12 hour for any price changes / range breaks.
We reach extreme prices: 1.6345, 1.6371, 1.6385. Watch closely 1.6345 if seen on a range break. That;s a perfect short point if seen for today. This price level tells me if a range break is seen it could very well be a false break. Interesting price developments for GBP but caution is still advised until confirmation of direction
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