The British pound is slightly positive on Tuesday, as we are trying to turn things around in this market.
GBP/USD
The British pound has been slightly positive during trading on Tuesday as we continue to see a lot of noisy behavior but quite frankly, I think you've got a situation where we had pulled back and now it looks like we are trying to do everything we can to find some type of upward momentum.
The 1.38 level above is an area that seems to be very difficult to clear and it's probably worth noting that even the 1.3750 level has been important.
Support and Resiliency Factors
If we continue to fall from here, we could test the 1.35 level but this I think is one of those places that we are going to see a little bit more resiliency against any US dollar strength due to the fact that the Bank of England is unlikely to cut rates rapidly and that has given the British pound a little bit of a lift over the last several months and quite frankly even when the US dollar was strengthening a year ago, the British pound was a lot stronger or maybe I should say less weak than its contemporaries.
At this point, I think we are looking at a market that is still more or less a buy on the dip scenario but if we were to give up the 1.35 level to the downside then I think that would be a very negative turn of events but still I believe that you would get more traction trying to short other currencies against US dollar as the British pound seems to be doing fairly well.
To the upside, if we break out, I think the 1.40 level is a fairly reasonable and obvious target as traders will continue to look at it as a potential round figure that people will be looking towards in order to take advantage of the longer term.
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