The GBP/USD pair has fallen again on Wednesday as the Bank of England reiterated fears of a weak economy, and the EU situation affecting the UK. Europe is good for 30% of the United Kingdom’s exports, and the UK banks are heavily exposed to EU debt and banks as well. Because of this, there is talk of another round of quantitative easing in the UK, and the Pound should get hit for this.
With this in mind, we have switched to a short position as the 1.58 level gave way. We think the 1.55 is the next area this pair will head to, and perhaps even lower to the 1.50 before it is all said and done. Also of note is support at the 1.53 level. We are selling rallies and will not buy the Pound at this point.
GBP/USD Forecast Nov. 17th, 2011, Technical Analysis