The British pound has been the epicenter of attention by Forex traders for quite some time now, certainly since the British voted to leave the European Union. You can see that we have seen quite a bit of bearish pressure followed by nothing. This is quite often the case, but I believe what we are going to see is some attempt at a bounce and then we will start see sellers again. After all, we are just now starting to get the first signs of economic numbers out of Great Britain after the vote to leave, and we in fact have seen that things are getting a little bit slower. With this, I believe that rallies will continue to offer selling opportunities in this particular market and perhaps other GBP related markets as well.
Selling rallies
It makes sense that these rallies continue to offer selling opportunities, because quite frankly the US dollar offers a bit of “safety” as the market has certainly been shaken by this move. I believe that any point in time we rally, people will start looking for “value” when it comes to the US dollar. So having said that, I believe that European currencies in general will continue to suffer, but the Pound of course would be very much the epicenter.
I think the 1.30 level below offers quite a bit of support, and that support probably extends all the way down to the 1.28 level. Once we break down below there, things get very ugly for the British pound. I don’t necessarily think that’s going to happen this month though. After all, August tends to be a bit quiet and quite frankly traders are essentially thinking about holiday rather than trading. So this being the case, I expect plenty of short-term selling opportunities in the course of the month, without maybe the massive breakdown that will eventually come.
