The pound has been setting up a new range
The main driver behind the forex market these days has been one of great unpredictability and instability. There is a big scope for some major developments to escalate on the geopolitical front and affect the whole financial market structure in a very big way. Tensions between Russia and Ukraine are seriously affecting binary options prices on forex.
The main points which are driving the US dollar trading these days are indeed far away from finance and economics. The political spat between Russia and Ukraine is likely to lead to an increased period of volatility going forward. The main takeaway - be very careful when trading these days.
As we can see on the chart the GBP/USD is struggling within yesterday's ranges and hasn't made substantial efforts to break away from 1.6570 and 1.6615 key levels set yesterday. We have seen the pair spike higher in Europe today and drop down lower after Russian forces allegedly entering Ukraine have lead to US dollar buying.
Data from the U.S. today has also been supporting the case for a stronger dollar with the currency nearing yet another 11 month high against the Euro in late European trading. With jobless claims in the US dropping by 1,000 during the last week we are expecting to see a very strong non-farm payrolls number next week.
Looking at the chart of the British pound against the US dollar there are two main scenarios which we would use to take our next trading decision. Let's start with the more favorable - the one where we are seeing a move to the downside. An hourly close below 1.6570 will push us to take this trend and buy daily put options for Friday's expiry.
On the other hand if we see an hourly close above 1.6620 we will be reversing our fortunes and prefer to buy daily calls. That said we are finding this event to be very unlikely from happening until the end of the week and have in mind that due to the Labor Day holiday on the US the trading session will be very thin! Good luck!