In the past two weeks we have witnessed an epic 750 pips + rally in Cable of the back of amazingly positive data from the UK, with both Retail Sales & GDP posting results above expectations.
Cable touched 1.59 for the first time this year yesterday, as it shook off the "2015 story" of range-bound cobwebs of 1.45-1.52 marks. By breaking the important structure level of 1.58... we shift back to harmonics as the AB=CD pattern lines up pointing towards further demand.
The A-Kill zone stars around 1.5850's and if you are a trend trader this market looks like it is going to be bullish and current levels would be a buying at a bargain price.
So... is GBP the new CHF?
With absolutely 0 hope for Greece reaching a deal the risk looks to be all on the EUR, as the bulls look for shelter. And with EURUSD potentially breaking parity..Where will all these sellers flock? The GBP? Possibly so!
With heavy risk on the SNB post the break and with CHF Economic data all over the place, investors are looking for a new safe haven. The GBP offers a large financial sector and capital markets strong enough to absorb the influx of flow. Historically, GBP has been used as a "quasi" safe haven in times of stress, for example during troubled times in the Middle East and the Economic recession of 2008-2009. However, the correlation between the EUR and GBP would be critical in determining the extent of damage caused from a prospective Grexit.
With the UK job market recovering, industrial activity heavily expanding and GDP at a healthy 2.7%... We are almost back to 2007 (pre-crisis) levels. - In fact, creating a huge contrast in the Euro zone.
With EURGBP heading south... it could be argued that the GBP is even more of a sage haven.
With the BOE looking to increase rates in either the 3rd or 4th quarter - the ECB in line is still committed to it's QE program and I am just so darn excited about this move.... I genuinely think we will hit 1.70 soon and then 1.80 all before 2016...
Trading with Atom8
For range-traders... Trend Followers... Scalpers... Carry guys/girls.... Atom8 offer superior conditions for FX trading... especially on GBPUSD and other GBP crosses.. with raw ECN spreads as tight as 0.3 on Cable.. no wonder we are growing so fast... (anyways)... Check us out at www.atom8.com and if you have any questions, you can always mail me.
Peace & Love
Anish
