Hi All,
So the new week is about to start off, a week after some of the major news has released. We saw some of the currency pairs make record highs and so next week would be very important to see whether these pairs would be able to sustain their gains. The chief among these currencies is the GBP and the pairs associated with it.The GBP rose to record highs against the dollar once the rate increase news released based on the initial euphoria. But it was clear that the rate hike was already priced in and so GBP began to loiter against all the other currencies without knowing what it needs to do.

GBP retraced a bit against the USD and GJ struggled to rise while at the same time EJ had a hugerise. GBPCHF also did not have a great day whereas considering the news, this pair should have been having a great time.All in all, GBP looks quite weak in this opening of the week. We need to see how the week opens and watch for sometime to see where it goes and see its likely direction.As for the crosses, i feel that they would continue to rise this week as well with the GJ being the weakest of the 3 crosses. As you all might understand, all the rate hikes, good fundamental news etc act in the form of a cycle.

Rate hikes would look good initially but as time wears on, the rate hikes would lead to a weakening of the economy and this would get reflected in the fundamental news and hence the increase in the price of the currency pair would be tempered down by the bad news in due course of time. This is the biggest factor that is holding back the GBP from rising very well against the other currencies. The effect of the rate hike on GBP would slowly be felt from August onwards and the economic news getting released from them would show the slowdown. This is what happened with the USD which had a bad time, then followed with a good time where it rose against the other currencies and now again it seems to be struggling against many of the currencies.But the crosses have a very basic fundamental thing called carry trades favoring them and thats why they show so much rise and so much action compared to the other currency pairs.

Happy Trading!!!