Massive Divergence in GBP – The British Pound

I see massive divergence in the recent move “upward” in GBP ( The Great British Pound ).

Fueled by talk of a “possible rate hike” out of the U.K coming “before” any kind of hike in the U.S, the currency pair GBP/USD has skyrocketed in “price” – yet floundered with respect to “strength”.

Coupled with the over all weakness in USD over the past few days, the combination of factors has pushed the pound ( guess where?) yup!  Right into a long-term area of overhead resistance.

How much higher can it go?

A better question might be “how much lower” as nothing “forex wise” moves in a straight line for long, and we are pretty ¬†stretched here as it is.

I will patiently wait for “at least” a turn on a number of smaller time frames, as well “Kongdication” but in all – it really doesn’t matter. I will get short GBP soon.

After a move of over 1,400 pips ( so in nominal terms the pound has gained 14 cents on USD ) since July – what are the odds it gains another nickel before “retracing” a portion of this massive move?

Slim to none.

Talk about a decent short-term investment return no?

Who cares what the DOW did.

4 Responses

  1. rolo September 30, 2013 / 1:23 pm

    I’m long GPD/CAD – it has broken out of a massive 3 year base (after coming down from 200+) so medium longer term chart wise it has an upside price target some ways higher ?

    • Pot Stock Watch September 30, 2013 / 1:30 pm

      Great question / point Rolo in that……….readers can now get even a “better understanding” of why / how commod currencies perform vs safe havens.

      Ok so…….GBP is kickin ass across the board – but even more so against Commods ( as is EUR in my “insanity trades” )

      What does this mean / suggest?

      It means the big boys are ditchin the commods. It means “risk off” on the horizon – it means “great work Rolo, and a fantastic trade both technically and more importantly fundamentally.

      So…..where’s Kong on future GBP weakness/turn? – Not trading it against the commods!!

      GBP can fall vs JPY and USD – and still maintain it’s upward trend vs Commods…..as in times of “risk off” – Commods fall EVEN MORE!

      Go Rolo!

  2. Nfxtrader September 30, 2013 / 1:41 pm

    Was just thinking the same today myself. The force is strong with this one so I took only a teensy position. Will wait a week or so to see what gives.

    • Pot Stock Watch September 30, 2013 / 1:55 pm

      GBP is frothy no question , and also a “ball ripper” vs JPY so…….

      Caution is most certainly warranted.

Leave a Reply

Your email address will not be published. Required fields are marked *