- The British pound has outperformed most of its contemporaries against the US dollar for quite some time.
- So, if the US dollar starts selling off, the British pound will be one of the bigger winners, I believe.
The British pound has rallied quite nicely during the trading session here on Monday, but at this point, I think we’ve got a situation where we are getting fairly close to significant resistance near the 1.3450 level. This is an area that I’ve mentioned multiple times as a significant barrier.
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Whether or not we can break above there remains to be seen, but I think we’ve got to look at this as a scenario where if we do start to sell off, then you would have to assume that traders are perhaps staying within this range. I don’t think that we have a huge breakout just waiting to happen. If that happens, the most likely scenario is that the Us dollar is falling against almost every other currency as well.
Critical Support and Resistance Levels
If we were to clear the 1.35 level, then I do think that the British pound can go much higher, maybe 1.37. The British pound has outperformed most of its contemporaries against the US dollar for quite some time. So, if the US dollar starts selling off, the British pound will be one of the bigger winners, I believe.
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If we turn around and break down, then I suspect that it will hold up better than many of its contemporaries, as it did during the last major US dollar rally. But you could short it if we were to break down below the 50-day EMA, I believe.
At that point, we might be looking at 1.32, possibly 1.30. In that scenario, it is likely that other currencies, like the Euro are going to be under serious pressure against the US dollar.
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