The British pound fell again during the trading session on Wednesday, wiping out the entirety of the gains from the election result. At this point though, we are approaching significant support.
The British pound has pulled back a bit during the trading session on Wednesday, reaching towards the 1.30 region. This is an area that should be massive support, and I think it’s only a matter of time before the buyers get involved and push to the upside. The British pound of course is in a much better place that it was, but now it looks as if we will test the top of the flag that had been so important previously. Ultimately, this is a market that will continue to find buyers longer-term based upon the fact that there is a little bit more in the way of stability.
To the upside, I see the 1.35 level as a major barrier that will take quite a bit of effort to break through, but once it does it’s very likely that we continue to go much higher as it would be a major breach of resistance. Underneath, the market should have plenty of support based upon the bullish flag but if we break down into that range between 1.30 and 1.28, it would of course be a very negative turn of events. Breaking below the 1.28 level would be nasty as far as the British pound is concerned. All things being equal, I do believe that this pair will go higher given enough time, but we need to let it stabilize a bit. I anticipate that in the next 24 hours or so things will calm down a bit, and we will get a bit of a bounce. That being said though, keep your position size relatively small.
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Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.