The British pound fell again on Monday to slice back through the 1.34 level. Now that we are below this level again, it is very likely that we will continue the overall downward momentum, and eventually go looking towards the 1.30 level. After all, the area had been pierced that we are sitting at recently, so it is likely that we eventually continue to see a lot of downward pressure due to the fact that we have been grinding lower.
The British pound continues to show a lot of negativity due to the fact that the Bank of England is looking very unlikely to tighten monetary policy anytime soon. That being said, the market has broken down below the bottom of the very negative candlestick from the Friday session as well, so that suggests that the market is likely to continue to go even lower. I think that any time we see a short-term rally, it should be a nice selling opportunity. To the upside, we have a whole slew of problems to face before we can go higher.
The 1.35 level is an area of significant resistance, and I think we need to pay close attention to whether or not the markets can close above there. Even if they do, then the market has to worry about the 1.36 level, an area that I think is even more resistive. This is backed up by the fact that the 50-day EMA is starting to break down below there, and sloping lower, but this is a market that tends to focus on that indicator quite a bit, so we need to get above that before I start to think about buying. Furthermore, it would need a completely different look to the US dollar and the bond market in the United States, so because of this I think we have a lot of work to do before we can get bullish. That does not necessarily mean that we cannot bounce; I think we will quite a bit. The British pound has been rather resilient compared to many of the other G 10 currencies facing the greenback.
