The GBPUSD pair broke much higher during the course of the session on Wednesday as we finally cleared the 1.58 level. Because of this, we feel that the market has broken out and it’s only a matter time before the British pound continues to go much higher against all currencies, not just the US dollar.

With this very bullish candle, we are buyers as the market should continue to go higher during the course of the next few sessions. If we pullback, we look at that as a potential buying opportunity, as it should represent value in the British pound. We believe that the longer-term uptrend should continue, and that the market should then head to the 1.60 level. We think that this market cannot be sold, because quite frankly there is so much in the way of support below that it’s not even worth being bothered with.

In fact, the 1.55 level below is essentially the “floor” in this market, and quite frankly it may be moving up towards the 1.58 level given enough time. It’s not that we think that the market is going to suddenly skyrocket higher, we think there will be challenges going forward. Ultimately though, we think that the move above the 1.58 level is the sign that we have been waiting for that the trend has completely changed, and as long as we go higher than that we should continue to see very strong move is to the upside.

The British pound of course is being helped by the fact that the US dollar has priced in so much in the way of massive interest-rate hikes, as the Federal Reserve now looks likely to only raise interest rates once this year, which means of course the US dollar is completely overvalued against most currencies. On top of that, the markets have punished Europe and the United Kingdom far too much. Yes, the Greek situation still continues, but at the end of the day the reality is that Greece should start to work with the European Union again, as this dance continues. With that, the United Kingdom should continue to benefit.

Editor’s Note: Equity investors/traders can use the Currency Shares British Pound Sterling Trust (FXB, quote) ETF to take positions in the yen without a FOREX account.  The ETF looks to track the price of the British Pound Sterling (GBPUSD), minus ETF fee. The fund seeks to reflect the price of the British Pound Sterling (GBPUSD) with the shares representing a cost-effective investment relative to investing in the FOREX market.

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