The British pound has been chopping around over the last 24 hours, as we have recently pressed against the 1.3650 level. That’s the area where we gapped lower after the Brexit vote, and of course offers a significant amount of psychological resistance. I think that once we break above this level, the market will go much higher, perhaps aiming for the 1.45 handle, and then eventually the 1.50 level. Ultimately, this is a market that should continue to be choppy, but after the Federal Reserve makes its intentions known, we can get a bit of clarity in this pair. I believe that this will have more to do with the US dollar going forward, then of course the British pound. If we can break above the 1.3650 level, the market should continue to go much higher over the longer term. That doesn’t mean that is can happen quickly, but I think it becomes more of an investment.
Support below
I believe that there is plenty of support below, especially at the 1.34 handle, and the 1.33 handle. Given enough time, I believe that the buyers will return unless of course the Federal Reserve does something completely unexpected, like raising rates. I don’t think it’s very likely to happen, and I suspect that most of the market feels the same way. Once the Federal Reserve confirms that he cannot raise interest rates after the hurricanes, I think that it will be the catalyst needed to send this market much higher. I believe that the US dollar may be getting ready to get pounded, and that could be shown in this market. I believe that buying dips continue to be the way forward and selling is all but impossible as I believe the US dollar is going to continue to soften.
Written by FX Empire