The British pound gapped higher against the US dollar at the open on Monday. We then fell almost immediately to fill that gap, and have since bounced from that level to reach the highs again. I believe that the market is probably going to continue to reach towards the 1.29 level above, and then possibly the 1.30 level above. Ultimately, I am looking for some type of exhaustive moved to start selling, but we obviously don’t have it currently. I believe that the longer-term trend will come back into play, but right now the Forex markets are certainly anti-US dollar. Because of this, I think that the British pound will get a little bit of a reprieve, but ultimately this is more about the US dollar that it is the Pound itself.
The significance of 1.30
I believe that the 1.30 level will attract a lot of attention, because quite frankly it is a large, round, psychologically significant number. That always seems to bring out the big-money, and I think that gives us an opportunity to start shorting again. In fact, I have no interest in buying this market until we clear above the 1.3050 level, something that doesn’t look very likely. The markets have been very hard on the British pound due to the negotiations with the European Union, and I don’t see that changing anytime soon. Because of that, I think that the market will continue to be choppy, and I look at the most recent move over the last couple of sessions as an opportunity to pick up the US dollar “on the cheap” going forward. However, if you are short-term trader you may be interested in buying for the small move to the upside that seems all that baked into the price.
Written by FX Empire