The pound is settled within a range in a relatively quiet market
As we are striking the last day of the trading week we observe the pound being range bound between 1.6610 and 1.6690. If we see a sustained break on either side we could opt to open a trade. For now a test to the upside seems more likely.
The pound has suffered a decline to 1.6610 in the aftermath of worse than expected retail sales data from the UK. However the slump was short lived as traders released that floods in the UK have impacted the data in a big way and the drop is unlikely to be repeated in February.
During the past couple of days the British currency has been testing the downside and marking lower lows every day. Come to think of it that is a sign of weakness, and if we add to it the fact that rebounds from new lows had lower strength marking lower highs, then we kind of get bearish on the UK currency.
Our baseline scenario is for the GBP/USD pair to make a test of yesterday's highs around 1.67, however to sustain a good move to the upside we need it to test and break at least above 1.6720. Stops are lurking above and if triggered we could see a retest of recent highs above 1.6820.
After the reaction low at 1.6610 after the news, the pair has steadily rebounded to trade at 1.6670 as of writing. If we see a sustained hourly close above 1.6690 we would be buying hourly calls.
The downside remains an open possibility but we are going to need to see a major decline to test the post retail sales low at 1.6610. If we see an hourly close below that level we would be buyers of hourly puts. Have fun and be careful in the last trading day of the week!