The British pound continues to grind away against the US dollar, and as I write this article, we are currently hovering just above the 1.39 level. This is a market that continues to see a lot of noise, and part of this is probably due to the uncertainty when it comes to the negotiations between Brussels and London. I believe that will continue to be a major issue when it comes to the British pound, but we also have the US dollar moving around quite drastically as the bond markets continue to be very noisy in America.
You can see that I have a clearer uptrend line in this pair, and I think it continues to offer a bit of a base for the British pound. Because of this, even if we do drop from here I have no intention of selling this market, as I believe that the 1.3650 level underneath will be a bit of a “floor”, just as the uptrend line is. I think that we may pull back a bit, but that will only be the market trying to build up momentum to break above the 1.43 handle and extend to the 1.45 level. I anticipate that this market is probably going to be very choppy but could offer value if you are patient enough to wait for lower levels.
I would only short this market on some type of breakdown below the uptrend line, something that I don’t see happening, but it certainly would be a change of attitude and would of course bring in a lot of stop loss running when it comes to the previous buyers. We’ve been rallying for a good year, and although we find ourselves in a very significant area, the last year has been reliable.