By FX Empire.com
GBP/USD rose again on Thursday as the pair continues to try and break above the 1.60 resistance level. The pair is a risk-related pair, and tends to rise and fall with the stock markets around the world. The Asian markets are starting to enter a technical bull rally mode, and many of the other indices are doing quite well, so this should lift the pair to a point.
Of course, Britain is heavily exposed to Europe, so those headlines could come out to haunt this pair. The pair will react in much the same way as the Euro when it comes to those headlines as the British are so heavily exposed to bonds and exporting to the area. The British send over 30% of their exports to the European Union, so what happens there certainly will have an effect on the United Kingdom.
With much of the world’s banking being done in London, and the British banks having such a global reach, we think that the world economy will continue to drive how this pair reacts. The 1.60 level above is obvious in its resistance, and significance in the form of a psychological round number. The pair looks very healthy at this point in time, but the level will have to give way in order for this pair to continue higher.
The pair cannot be bought at this point in time because of the obvious resistance area, so we will be watching this level in order to get a possible idea as to when we should be going long, or sell. The pair is a sell if we manage to break below the bottom of the shooting star as it shows a real reversal of momentum in this market. The lows represent the point in which the bulls would start to lose money. (At least the ones from that impulsive session.) We will need to see a daily close above the 1.60 level in order to get long at this point as we need to see that resistance crumble in order to feel comfortable moving forward.
GBP/USD Forecast March 2, 2012, Technical Analysis
Originally posted here