The GBP/USD pair initially fell during the day on Friday, and saw quite a bit of volatility after the jobs number came out in the United States less than anticipated. We now find the market hanging about underneath the 1.29 handle, which is a major level. I believe that if we can break above there, the market will probably continue to go to the 1.3050 level, which of course offered a significant amount of resistance recently.
Buying on the dips will probably continue to be the best way of playing this market, with the 1.2850 level underneath offering a significant amount of support. If we can break above the 1.29 level, it’s likely that we will continue to go even higher than that. Longer-term, I believe that we do have the buyers getting involved, and that we should see them flex their muscles sooner rather than later.
There is still a significant amount of headline risk out there, as we worry about the British leaving the European Union. That of course will weigh upon the British pound from time to time, but ultimately I believe that the pair has found a bit of a bottom, and as long as we can stay above the 1.2750 level underneath, we still have a built-in bid when it comes to the British pound. I believe that we are going to try to get to the 1.3450 handle longer-term, but with all of the concerns around the British economy and the British pound, it is going to take quite a bit of time to get there. Again, selling is not a thought currently, least not until we break down below the 1.2750 level, something that we are nowhere near doing at the moment.
Written by FX Empire