British pound continues to struggle during Wednesday sessionThe British pound fell a bit during the Wednesday session, testing the 1.3450 level again. The market looks very susceptible to downward pressure, and with the rising interest rates in the United States, it’s likely that we could see a bit of volatility going forward.
The British pound fell during trading on Wednesday, reaching towards 1.3450 level where it has found support again. However, every time we reach towards this level we are chipping away at support, and we are crossing a major uptrend line. It’s easy to think that it’s only going to take one headline to finally throw this pair over the cliff and send it much lower. At that point, I think that we go to the 1.33 handle underneath, and then perhaps even to the 1.30 level after that.
It’s already shaping up for a summer of US dollar strength, and I think that’s going to continue to be the case, even in this pair that features a currency that will more than likely get at least one interest rate hike by the end of the year. However, that doesn’t mean that there won’t be volatility, and there will be the occasional rally. I believe that these rallies are made to be sold, and at the first signs of exhaustion that’s exactly what you should be doing. I do not think that this is a market that is going to be easy to buy, at least not anytime soon.
Watch the 10-year yields in the United States, if they break above the 3.06 level for any sustained amount of time, that will plunge this pair rather drastically as money goes to where it’s treated best. I also believe that some type of major “risk off” headline could send this pair much lower as well.