The British pound went sideways during the month of May, after breaking out above the 1.2750 level. This was an area that had been very resistive over the last couple of years being broken, of course signifying that the buyers had returned. I think that we are trying to continue to reach towards the top of the previous consolidation area, which should send this market to the 1.3450 level. If we can break above there, that would be a very bullish sign longer-term, especially if we can break above the 1.35 handle. Given enough time, I do think that happens and after the reaction to the election polls initially sending this pair lower, the 1.2750 level has offered massive support. I believe that the market turned around due to the election results turning everything back around again, and I believe that being the case the longer-term moved to the upside could continue.
The one level I’m watching
The low-level I am watching is the 1.2750 level. If we can stay above there, then the only thing I expect to see is bullish pressure over the longer term. Alternately, if we break down below that level, I think that the market will start to drop towards the 1.25 handle. June will be a very interesting month for the GBP/USD pair that will need to make some type of decision. I believe that we are more than likely going to see plenty of buying pressure, but of course if things change due to the election, we could get a significant unwind. Currently, I believe that volatility will continue but I would anticipate another strong impulsive move once the election is done, or at least settled and obvious ahead of time.
