The British pound falls during the week to test support
The British pound fell during most of the week, reaching down towards the uptrend line and the 1.3750 level. I think the 1.3650 level is essentially where the bottom of the uptrend would be, so if we break down below there on a daily close, I think that this market comes unwound quite drastically. Looking at the chart though, we have some work to do before that happens and it’s starting to show signs of support on Friday, perhaps lending itself to follow the uptrend line higher.
Interest rates in America continue to climb on the 10-year treasury yield, so that of course has put upward pressure on the US dollar. There are a lot of concerns when it comes to Britain, as we are negotiating it’s exit from the European Union, but ultimately there are signs that perhaps the British will have to raise interest rates relatively soon, despite what Mark Carney has publicly stated as being a bit premature. The 1.43 level above is the ceiling currently, and as it is the middle of the larger cluster going back to early 2016, it makes sense that we pulled back a little bit. Longer-term though, I think we will make another attempt at the area above, but we need to show strength and support at this uptrend line in the meantime. This next candle will be crucial as to where we go next.