The British pound initially rose during the day on Friday but found enough resistance at the 1.30 level to roll over and it now looks as if we are going to continue the move lower. I think there is support at the 1.2950 region, but eventually will probably try to break down below there. I think that the 1.28 level underneath is massively supportive, and I do recognize that in the longer-term charts we have been rising for some time. However, that rise has also been very choppy which of course suggests that there are going to be a lot of pullbacks. That’s what we are seeing right now, a simple pull back.
Part of what we have seen has been noise from negotiations, as the first day of true negotiations ended in a stalemate. However, that’s not a huge surprise as the United Kingdom leaving the European Union is a very complex issue. It was never going to be solved in one day, so I don’t worry too much about headlines, least not from a longer-term standpoint. Yes, it will cause sudden shifts in one direction or the other, but the real profits are to be made in longer-term moves. I believe that longer-term traders are still looking to pick up the British pound on the cheap, but right now it certainly looks as if the short-term traders are pushing lower, trying to offer value for traders to get involved. If we break down below the 1.28 handle, then the market will probably go much lower.
Written by FX Empire