The GBP/USD pair fell initially during the trading session on Wednesday, slicing through the 1.3175 level, but has found a bit of support. Because of this, I think we are going to bounce and go looking towards the 1.3250 level above which has been an area of interest lately. Ultimately, the market looks as if a break above there should send this market much higher, perhaps reaching towards the 1.3350 level next. The British pound will continue to show signs of volatility, as there are a lot of questions about what happens next in the “Brexit.” With so much in the way of uncertainty, it’s difficult to imagine a scenario where traders are comfortable owning the British pound for long periods of time, but I believe that over the longer term, money will come back into the British pound.
Ultimately, I think that we will try to test the 1.3650 level above which was the gap lower from the surprise vote, and that of course should continue to be massively resistive. However, once we get above there, the market should continue to go much higher as it will be free of all the negativity of that action. It’s a major gap on the daily charts, and of course gaps eventually get filled. Once a gap gets broken though, that becomes a very bullish sign and therefore I think that if that happens, it’s likely that we will go to the 1.40 level rather quickly. Ultimately, I think that volatility continues to be a major issue in this pair, as the unknown part of the equation continues to be a major problem. If we were to break down from here, I suspect there’s a bit of a “floor” at the 1.30 level underneath.
Written by FX Empire