GBP/USD consolidating and exploring its next options
As we are close to call it a day, the GBP/USD pair falls under the radar of our forecast for Wednesday trading, when we will see a number of economic news from China overnight, but no material data from the U.S. nor the U.K. The British pound has been consolidating in recent trading sessions not marking new lows to the U.S. dollar in contrast to the euro.
The main risk to the outlook for the British pound is a speech by the governor of the Bank of England Mark Carney late tomorrow afternoon. We would be keen to know more about what are the latest insights from him as the currency is currently being supported by a mildly hawkish tone from the central bank.
Looking at the charts we are seeing tight ranges engulfing the pair for the time being. On the topside we are focusing on 1.51, while on the downside we are seeing 1.5030-40 as the key area going forward. The pair was close to 1.50 after the market opened on Monday, but a break never materialized.
For the time being we are refraining from making a definitive call whether the GBP/USD will go up or down, however we have a strategy in place to trade the pair tomorrow. Our basic outline is dependent on the outcome on the technical charts in the absence of much fundamental news.
If we are to trade the GBP/USD on the upside we would have to wait for the pair to move higher towards the topside of the range which we mentioned above. We would be buying daily call options for tomorrow's expiration at 21:00 GMT in case we see an hourly close above 1.5100.
On the other hand, if we see pressure to the downside increasing, we would be identifying 1.5030-40 as the key area where we can find a point where to buy daily put options on the GBP/USD. Hence if we see a close below 1.5030 we would be buying daily puts for the 21:00 GMT expiry tomorrow, on the 11th of March.