The GBP/USD pair has been going back and forth for quite some time now, as shown on the weekly chart that I have attached to this article. The 1.20 level below is a massive support barrier and I do not believe that it’s going to be very easy to break down below that handle. On the other hand, there is massive resistance at the 1.2850 level above, and of course a bit of psychological resistance at the 1.25 handle.
Brexit
Recently, most people want to focus on the fact that the United Kingdom voted believe the European Union, and somewhat rightfully so. However, that has all been baked into the price recently and therefore I don’t expect much in the way of fireworks when it comes to this particular pair. I think based upon monthly charts, we could see this market go down to the 1.15 handle, but it is going to take some serious momentum building at this point. With that being the case, I expect the month of November to be fairly quiet in the GBP/USD pair, much like the month of July was.
I think that the market will continue to bounce around the 1.20 level on the bottom, and perhaps the 1.25 level on the top. I don’t necessarily believe that we are ready to break out in one direction or the other, but I have to admit that I have somewhat of a negative bias to this particular market. I recognize that the US dollar has been selling off recently because of the presidential polls changing, but quite frankly that’s just typical noise in a marketplace that doesn’t have much to focus on. Ultimately, I think this is a market that you can range trade for most of the month, and December could see the usual move as position squaring by money managers happens before the end of the year, and then a sudden drop-off ready for the holidays. Quite frankly, this pair may have quite a long way to go before we make anything significant happen.
