The GBP/USD pair rallied during the day after initially grinding sideways on Wednesday. The 1.30 level above continues to offer a significant amount of resistance, and certainly a psychological barrier for markets to deal with. If we can break above the 1.30 level, the market should continue to go much higher, perhaps reaching the top of the previous consolidation area which is the 1.3450 level, an area that I have been talking about for some time. Alternately, I think that until then we will probably continue to see quite a bit of exhaustion near that area as it is such a large, round, important number. The British pound of course has quite a bit of noise surrounding it, as the market must worry about the United Kingdom leaving the European Union, and of course whether or not the inflation in the United Kingdom will pick up.
Continued noise and choppiness
When I look at this chart, I recognize that there is a lot of support at the 1.29 handle, but the 1.30 level above is massively resistive. I believe we are currently trying to build up enough momentum and volume to finally break out to the upside. The uptrend line that I have drawn on the chart based upon daily action should continue to be followed. If we can break down below the thick uptrend line, then I feel that the market could turn around and break down. I do believe that the British pound will continue to go higher, and quite frankly I’ve been a bit surprised it’s taken this long to do so. Once we broke above the 1.2750 level, I felt that the downtrend and the British pound was over. Hopefully, we will start see that buying pressure returned to the market.
Written by FX Empire