The British pound has been a bit sluggish over the last several weeks, but it looks as if the 1.30 level is starting to show a certain amount of wherewithal and support for the market, thereby making me a bit bullish for this market, but I also recognize that it’s going to take some type of catalyst to turn things around and start rallying. That being the case, I think it probably comes in the form of some type of political resolution in the United Kingdom. After all, we are going through the Brexit, and any good news at this point politically will probably turn this market around rather drastically. The one thing that I do notice is that even with the bad news coming out of the UK, we cannot fall below the 1.30 level for any length of time. It is because of this that I am already long of this pair, for a longer-term move.
Short-term pullbacks should continue to offer value the people are willing to take advantage of, and I think that we will continue to see longer-term traders pick up the British pound “on the cheap.” I suspect a bounce to the 1.35 level is reasonable for the month, especially on good news. Longer-term, I think we even go to the 1.40 level.
Ultimately, if we do turn around and break down below the 1.29 handle, then I believe that the market probably goes down to the 1.26 level initially, perhaps even followed by the 1.25 level. I think the next couple of months are going to be crucial with the British pound’s future, and I believe that there is probably more potential of a shock to the upside than the downside.
