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GBP/USD Forecast 24 Oct 2014

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GBP/USD Chart 24 Oct 2014
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The pound seems to be gearing towards an attempt higher

The British pound is at the cross roads as it has been consolidating its losses over the past 24 hours. Even materially lower retail sales numbers from the UK today haven't managed to cause a major drop lower which could be a sign that an imminent move higher is in the cards.

The GBP/USD binary options forex pair started trading on Thursday around levels close to 1.6040. The has been little evidence of a directional move as the flows were subdued in the beginning of the session as the all important UK retail sales number was heading towards the wires.

And it did come out at 08:30 GMT, revealing a larger than expected decline by 0.3% sending the British pound sharply lower to test Wednesday's lows around 1.6010. As the pair spiked lower towards 1.6000, some shy bids emerged to drive the British currency higher towards 1.6050 as the trading kicked off in New York.

As US stocks rallied materially there was ample dollar demand particularly against the Japanese yen and the Australian and New Zealand dollars. There was not much merit behind the pair to make dramatic moves before the last trading day of the week tomorrow, as news were subdued and the main activity focusing on the Dow.

From what we can tell from the recent price behaviors we would be keen to buy daily calls for tomorrow's expiration at 20:00 GMT because we didn't see the GBP/USD pair break below 1.6000. While we acknowledge the risks of that happening tomorrow, for now it looks distant.

On the flipside if we see a drop and a sustained close on an hourly basis below 1.6000 we would be focusing our attention to the downside and buying daily puts for Friday's expiration, which is also the last expiration this week. Stay profitable and cautious in your last trading day this week, good luck!

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