The GBP/USD pair has rallied over the last 4 weeks, and more importantly, has broken above the significant 1.3333 level. Now that we have done that, and it looks very likely that we have formed a hammer for the final week, and I believe it’s only a matter of time before we go to the 1.3650 level. Pullbacks at this point in time should be buying opportunities, and you can see that there is a very nice uptrend line underneath, which should continue to support this market. I believe that the market rallying at the smallest hint of a deal between the UK in the EU on the divorce bill showing such bullish pressure, suggests that we are ready to go higher. In fact, it is not until we break down below the 1.31 handle that I would be concerned about selling.
The 1.3650 level above is massive barrier, and we may struggle to get above there. As soon as we do clear that level though, it’s likely that the market should continue to go to the 1.40 level. It’s going to take a significant amount of momentum to clear that level, but once we do I think it will release a significant amount of inertia. At that point, I believe that the market is ready to go to the 1.45 handle, which was the beginning of a massive selloff. In general, I believe we are starting to see the end of the bearishness and the British pound after the so-called Brexit vote. However, it is going to be very volatile and obviously there are going to be a lot of noisy headlines to get in the way. If we were to break down, the 1.3 level would be the absolute “basement” of any hope of an uptrend forming.
