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This particular pair has unique fundamentals. Both the leg of the pair has a hawkish central bank attached to it. As of now market is clearly with the view that FED will be the first major bank to lift the rates this year, however interest market shows expectations for Bank of England (BOE) is not far behind.
While US economy is registering higher inflation compared to UK, wages are rising at much faster pace in Britain compared to the States.
Pound is likely to return to focus once the FED hike is done with and Pound remains lot cheaper compared to Dollar, which might provide bigger opportunities in going long in the pair.
One can go long in Pound in the pound, however one should remember trade idea being discussed below is for much shorter term.
Pound might also pose attractive opportunities against fundamentally diverging pair, however in this discussion we are sticking to this pair.
Trade idea -
- Long pound against dollar at current price of 1.556. Position addition possible around 1.552.
- Initial target is 1.568-1.572 area, second is around 1.58 and final target is at 1.59-1.595 area.
- Stop loss area for this position at 1.544 and 1.532 area.
