The British pound initially tried to break above the 1.42 handle during the trading session on Wednesday, but as we await the Consumer Price Index numbers on Thursday, it is a bit much to expect that the pair can just take off to the upside and break out. After all, traders are going to be paying close attention to the inflationary story coming out of the United States, which will have a massive influence on the greenback. As far as the British pound is concerned, it is probably a bit much to ask for a breakout until we get beyond there, even though the United Kingdom certainly looks as if it is ready to reopen.
As you can see over the last couple of weeks, the 1.41 level has offered a certain amount of support, just as the 1.40 level underneath will. I think that we will have buyers on these dips regardless, as there is plenty of value hunting out there waiting to get involved. If we were to break down below the 1.40 handle, then I think that the market would probably go looking towards lower levels. With this being the case, the market is likely to continue seeing plenty of support regardless of what happens with the announcement. This is why I look at a pullback as an opportunity, unless we get that daily close below the 1.40 handle.
If we were to break out to the upside, then the market is likely to go looking towards the 1.44 handle, possibly even the 1.45 handle given enough time. I do think that is the eventual path forward for this market, but obviously we have a lot of work to do, as the last couple of weeks has seen moment very difficult to pick up. However, we are in an uptrend and have plenty of history behind us pushing this pair higher, so I think it just makes sense to look to the upside. In fact, I have no interest in shorting this market until we break down below the 200-day EMA, which is closer to the 1.37 level. With that in mind, I will simply look for an opportunity to take advantage of value as it occurs.
