- The British Pound has pulled back a bit from a crucial resistance barrier in the form of 1.28.
- I think at this point in time, you need to pay close attention to what is going on in the British Pound, mainly due to the fact that it could give us a little bit of a heads up as to whether or not we get US dollar strength in general.
I don't know if that would be the case, but it certainly looks like we have gotten exhausted at the very least. It is probably worth paying close attention to the 1.2650 level, because if we were to break down below there, I think at that point you would probably have a continuation of the selling pressure. It's possible that you have a scenario where the GBP/USD market will continue to see a lot of noise, but maybe consolidation. So, there's a lot going on in this chart. If we could break above the 1.28 level, that would obviously be very bullish. And I think a lot of traders would go flying into the market based on momentum and FOMO trading, if for no other reason.
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What if we continue to see selling?
If we break down below the 1.2650 level, then we could drop to the 1.25 level. And I would also suggest that perhaps we would probably see the US dollar strength across the board as well. So be cognizant of what goes on in this pair. It could be a little bit of a harbinger for the rest of the Forex markets.
Keep in mind that if you get the directionality of the US dollar correct, in general you can get most things correct, and that’s especially true in the Forex markets as all of the major pairs include the greenback. With this being the case, I am paying close attention to this pair, because the British pound has been such an outlier against the greenback, and that suggests that if we were to lose strength here, we probably see multiple other currencies start to fall against the greenback at the same time.
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