The British pound has been the center of the Forex world’s attention for some time now. The last month has been very strong for the British pound against many currencies around the world, but we are starting to see a little bit of exhaustion in the buying pressure. However, I think that looking up on this chart it’s easy to see that there are some eager buyers below, especially near the ¥145 level. You can see that we have broken above a major downtrend line, although we haven’t exactly exploded to the upside. I think what we are looking at for the month of October is going to be a lot of sideways grind.
If we break above the ¥150 level, that will send this market much higher, and I would anticipate the ¥155 level would be the next target. Alternately, if we break down below the ¥145 level, then I think we go looking towards the ¥144 level, and then possibly even lower than that with a bit of a “floor” in the market at the ¥140 level. That would also decimate the downtrend line that featured so prominently on this chart and could lead to more range bound trading in a 1000 pips scenario between the ¥140 level and the ¥150 level.
Remember that this pair is highly sensitive to global trade, but ultimately I think this is more about the Brexit. One thing I do know about the British pound is that every time we have sold off due to a negative headline involving the Brexit lately, we have seen this market turned around and capture all those losses again. I suspect smart money is starting to invest in the British pound for the longer haul.