GBPUSD Moves Through 1.35
The fact that the weakening has been happening during a period of low liquidity has made the move even more suspicious though the bulls have to be given credit as they have managed to break through some important resistances and have been able to overcome some strong regions of selling during this period. The GBPUSD pair trades above the psychological region of 1.35 as of this writing and this should be a good boost for the bulls in the new year.
But we continue to take this move with a pinch of salt and would advise the traders to wait for a few days to see how the prices react as the liquidity begins to pick up. The European and the US markets would be open after a long weekend and with the traders beginning to return back to their desks, the liquidity is expected to pick up during the course of the week. It remains to be seen whether all the big traders and the investors agree with this weakness in the dollar and if that is the case, then we should see the fall in the dollar begin to accelerate during the course of the week.
But if the dollar weakness was more due to trade positioning and trade open and close due to the need for the books to be closed for the end of the year, then we are likely to see the reversal of the move that we have seen in the dollar over the past week or so. Looking ahead to the rest of the day, we have the manuacturing PMI from the UK while there is no economic news from the US. As it is the first trading day of the year in the FX markets, it would be interesting to see what the traders think about the dollar for the short term.