GBPUSD: Looking to Sell As Bullish Correction Fades

[B]My picks:[/B] Short GBPUSD (pending)
[B]Expertise:[/B] Global Macro, Classic Technical Analysis
[B]Average Time Frame of Trades:[/B] 1 week = 6 months

The fundamental reasons to be short GBPUSD are fairly straight-forward: the latest economic growth forecasts suggest the US will outperform the UK by a significant margin in 2009 and 2010, suggesting the Fed will lead their counterparts at the BOE in raising interest rates and unwinding quantitative easing measures; from a valution standpoint, GBPUSD is highly overvalued versus its implied “fair” exchange rate, bolstering the bearish scenario. That said, favorable technical positioning remains elusive: GBPUSD showed signs of a double top at 1.6667 but found near-term support and rebounded at resistance-turned-support marked by the top of a rising channel that had contained prices since mid-March and was overcome in May. The previous high has not been taken out and the double top scenario remains valid for the time being. We will wait for the current correction to lose steam to enter short.