The British pound went sideways during most of the session, but then shot to the upside as the Americans came back to work. Lately, the American seem to be much more bullish of European currencies than the Europeans themselves, so that’s not a huge surprise. It looks as if we are testing the 1.3150 level above, and that although we may struggle a bit, I believe we are trying to build up enough pressure to finally break above it. Once we do, the market is free to go to the 1.3450 level above, but it will probably take quite a bit of time. Quite frankly, I think that it will be a “buy on the dips” situation going forward, as it won’t necessarily be an easy move to the upside.
Keep in mind that there will be a lot of headlines to deal with, because quite frankly the exit negotiations out of the European Union by the British will continue to be very messy. There will be a lot of political posturing out there, and that of course will continue to cause a lot of noise. Because of this, I expect short-term pullbacks to appear, but those pullbacks should continue to be value just waiting to happen. I think that it will take a lot of wherewithal to trade this market, but certainly seems to be a market that should go in one direction. I don’t have any interest in shorting, and I believe there is more than enough pressure underneath to keep the market afloat.
Written by FX Empire