FxWirePro: Sell sterling targeting 1.2

A major attempt to break higher on the upside this month can now be called to have failed for the sterling. The sterling was rising higher on the optimism of the economic outlook. The majority of the economic numbers were better than expected, the dollar was weak, data from the United States were disappointing, speculators were scaling back their shorts; in fact last week, there was a big covering according to the COT report. Yet the sterling failed to break higher, despite breaking above a key resistance level around 1.34 on an intraday basis. The breakout failed and we suspect that it is time to sell the sterling once again. Focus is now once more shifting towards the uncertain path that lies ahead.

We have called for parity in GBP/USD exchange rate and we stand by that but we warned earlier that it could turn out to be a long term case. But, that doesn’t mean that there are no short-term good selling opportunities.

Trade idea:

• Sell GBP/USD at the current price of 1.295 against the dollar, targeting 1.2 in the short to medium term, while placing the stop loss around 1.34 area.