The British pound went sideways initially during the day on Tuesday, and then fell apart and reached towards the 1.26 level. That being the case, we found support their, as it is a large, round, psychologically significant number. It looks as if the market could bounce from here, perhaps looking for selling opportunities at higher levels. I think there will continue to be a lot of volatility in this market, as the headlines coming out of the divorce proceedings from the European Union continues to weigh upon all things British. Ultimately, I think that the market will be moved by headlines, and those headlines are going to be unproductive and erratic to say the least. Ultimately, the selloff was rather drastic, so I think a bounce is probably what we will see. If we can break above the 1.28 handle, the market should continue to go to the 1.30 level above.
I think that no matter what happens, the volatility will be very strong in this market, as the questions continue to revolve around what would happen next. I believe that the British pound will be a reflection of the proceedings, and therefore could be a very difficult currency to be involved in. Nonetheless, I think that the Federal Reserve raising interest rates also is putting bearish pressure in this market, so no matter what happens, it’s probably best to keep your trading positions very small. The short-term, I believe a bounce is very likely to happen as the 1.26 level looks to be offering support again, just as it had previously offered a significant amount of resistance.
Written by FX Empire