British pound falls through trendline against greenback during the weekThe British pound fell during the week, slicing through and uptrend line against the greenback, showing signs of extreme negativity now. I think that the market will ultimately find sellers again, and that we could turn things around to see a complete change in trend.
The British pound has fallen rather rapidly over the last several weeks, as interest rates in the United States continue to pick up. If that continues to be the case, then this market should break down rather significantly, perhaps through most of the summer. I believe that the US dollar will continue to strengthen for a while at least, and of course as long as there are concerns with the British economy, it makes more sense for this pair to go down that. Yes, the Bank of England is likely to raise interest rates at least once in the next year, but the Federal Reserve is expected to do it at least three times. That by itself should continue to drive this pair lower.
I believe that the market will find support at the 1.30 level underneath, as it is psychologically important. However, rallies at this point continue to be sold until we can break above not only the uptrend line, but perhaps the 1.3650 level after that, which of course would take a lot of momentum and strength to do so. That would change the overall outlook of the market, but right now it seems as if the uptrend is dying before our very eyes. The greenback continues to strengthen against most currencies, but the European currency seem to be especially sensitive, which makes a lot of sense as there’s so much noise over there with the divorce proceedings and of course the Italian situation throwing a monkey wrench and everything.