The British pound has been very choppy over the last several sessions, bouncing from the 1.32 level underneath, which offers support. The uptrend line on the hourly chart looks very likely to be supportive as well, and I think that it’s only a matter of time before we build the necessary bullish pressure to break out to the upside. However, if we were to break below the 1.32 level, it’s likely that there will be more selling pressure, down towards the 1.31 level underneath. The market continues to be choppy and negative, but I think that eventually we which will go towards the 1.35 level above, which of course is a psychological figure. Longer-term though, the 1.3650 level is much more significant resistance, and we need to break above there to start buying from a longer-term perspective. Until then, it’s likely that we will continue to see short-term “buy on the dips” moves.
In general, I believe that the British pound will continue to find plenty of reasons to go higher, but I’m also aware that the Federal Reserve is very likely to raise interest rates. I think that we are going to see this market go much higher longer-term, but there’s obviously a lot of work to do. After all, the British pound was absolutely slaughtered after the surprise vote to leave the European Union. It takes a while to build confidence after that type of melt down, which I think we have been doing over the last several months. It’s going to take a lot of work, but I think that longer-term investors are willing to hang on to the British pound. For short-term traders, buying on the dips and taking profits quickly is probably the best way to trade the market. I have no interest in shorting, at least above the 1.32 handle.
Written by FX Empire