The British pound has enjoyed a very nice move to the upside, bouncing from the 1.27 level underneath. That’s an area that is significant support anyway, so that’s not a huge surprise. I think at this point, this was a bit of a “relief rally”, which had gasoline thrown on it as the rumor came out. However, that rumor has since been denied, and I think we will probably see a pullback from here. With the jobs number coming out tomorrow, that could keep this market somewhat afloat because a lot of traders won’t want to put large positions on, but ultimately I think this is a pair that still favors the downside, at least until we get some type of clarity with the Brexit. One thing market participants hate is uncertain, and we have plenty of that right now. Overall, I like the idea of shorting this market, until we can break above the 1.30 level which would show an extreme amount of bullishness, and probably due to headline, I’m not interested in buying this pair. I’m not necessarily calling for a meltdown at this point, but certainly the path of least resistance is going to be lower over the longer-term.
GBP/USD Midday Video 01.11.18
If we did break above the 1.30 level, then the market could go looking towards 1.3250 level after that. At this point though, I think it’s going to take an extreme amount of pressure to make that happen.