The GBP/USD pair initially fell on Thursday, but popped back above the 1.2750 level. By doing so, it shows that the market is trying to rally, that of course is a good sign for the British pound as the market has been so volatile. It appears that the various members of the Monetary Policy Committee and the Bank of England are closer to raising interest rates than most people thought, so that of course should continue to help the overall direction of the British pound in the short term. The 1.28 level above is more than likely going to be a target, but I also recognize that there is a lot of noise above as well. This is a market that has so many different moving pieces that it’s almost impossible to keep track of the times.
There is going to be serious headline risk when it comes to this market, as we continue to see conflicting ideas coming out of London. I believe that eventually we could see buyers jump back into this market, and a break above the 1.28 level would be massively bullish. At that point, the market should then go to the 1.29 level. Alternately, if we breakdown from here, we will probably go looking for the 1.27 level, and then the 1.2650 level. Honestly, I would not be surprised at all to see this market hit these levels over the next couple of days, as there is more than enough volatility to throw significant pressure in both directions. I think that headlines will continue to drive where we go next, and that is almost unpredictable. Pay very close attention to your positions, and make sure that they are smaller than usual as this could be a very dangerous place to be.
Written by FX Empire