The British pound initially fell during Monday, but then sliced through the 1.3250 level early in trading. We pulled back a bit, testing that area for support. But now it looks as if we are ready to consolidate in this general vicinity, and I think that if we can break above the surge during the trading session, I think that the market then goes towards the 1.35 level, the next psychologically important handle. It’s going to be very noisy, because we will have to keep an eye on the British pound and headlines coming out of the Brexit as well, but there is also Mark Carney and other members of the Bank of England testifying before Parliament today about inflation. That obviously has a massive effect on what happens with the British pound, and that of course is a main driver of Forex markets.
If we break down below the 1.32 level, I think that the pair will probably go down to the 1.3050 level next. Right now, it certainly looks as if the buyers are trying to make some type of statement as we have seen them come back into the market every time the paired dips. Above current trading areas, there is the 1.35 handle as mentioned previously, but there is also the 1.3650 level after that, which was the scene of a massive gap lower. If we were to break above there, we could go much higher, perhaps reaching towards the 1.40 level later. It’s going to be very difficult to have that happen in the short term though, so I think we continue to see a lot of volatility and short-term opportunities at best. The pair continues to be very difficult, so smaller position sizing is preferable.
Written by FX Empire