The USD is not the only 'safe haven'-like currency that investors should be looking at in 2022. GBP could prove to be a vital play in the coming days or months as big changes are about to happen in the global forex market. Here is why the pound is a buy this week.
On Thursday, the Bank of England will announce the official bank rate. Expectations are that the new rate will be 75 basis points, or 25 bp higher than the current rate. If the BOE decides to go through with this, the pound will be leading the major pairs except for the kiwi in the highest interest rate. And this country is known for having low interest.
As you can see form the image above, a 0.75% interest rate will be the a 10-year high and matching that of 2018-2020 rates.
Setups Indicate The Pound Is A Buy
EUR/GBP (Short Bias)
This pair has been especially volatile the past several days, and it is likely because investors are trying to form a directional bias. Price is showing hard rejection on the 1D chart after making a higher high. Resistance sits above at the 200 DMA, although it already looks like price is starting its move to the downside.
GBP/JPY (Long Bias)
GJ has a lot going for it right now. Price broke above resistance after bouncing up from the 78% fib level. Now, it crossed and closed above the 200 DMA suggesting further highs. Clear resistance doesn't really show up until the triple top around 157.500s.
GBP/CHF (Long Bias)
GCHF looks like a good long play if price can break and close above this resistance level on the 1D timeframe. Support lies just below in the 1.21000s at a double bottom. If price breaks resistance, we could see a test closer to the 50 DMA or the tops around 1.25560s.
Save time looking for setups with the EdgeFinder's watchlist! In a glance, see the EdgeFinder's current top buys and top sells.
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