GBP/USD shorts squeezed on a holiday
The 125 pip rally in GBP/USD today just doesn't add up. It came after slight misses in US consumption and inflation.
Sure the PCE report means a smaller chance of a Fed hike in June but the difference isn't large and it could easily be wiped out by the rest of the economic data slate due this week (it's a big one).
I just don't think the news justifies such a large GBP jump. Technically, it nearly touched the 50% retracement of the decline over the past two weeks. I think that's a good time to jump in. If not, the 61.8% level at 1.4339 is reasonably close as well.
A short with either one as a stop would risk 25 or 80 pips depending on how aggressive shorts want to be. The timing of the trade -- as always -- is the tough part. A second squeeze may hit when London opens after a four-day holiday tomorrow and that could be a better time to sell than now.
