Christopher Lewis
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The British pound formed a shooting star for the Tuesday session, and on Wednesday is starting to break a bit lower. That being said, the market is likely to see value underneath, especially near the 1.3750 level which was where we had broken out of previously. That area of course should have a certain amount of “market memory” attached to it. After all, it took several attempts to finally break out to the upside so the British pound should continue to be bullish in general.

On the other hand, if we can break above the shooting star, then the market is likely to go looking towards the 1.40. That level of course is a large, round, psychologically significant figure, and should cause a certain amount of headlines to cross the wire. However, when you look at the weekly chart, the 1.42 level above is significant resistance and probably the real target once it is all said and done.

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I still believe that there will be plenty of buyers on dips, due to the fact that the British pound of course have gotten a significant boost with the inoculations being done in the United Kingdom. Furthermore, the stimulus package coming out the United States should be rather large, but in the short term there are a lot of concerns about the 10 year note and the yields that it is starting to offer. That does make the US dollar attractive for the short term, but longer-term there are still a lot of people betting on the greenback falling, so that should make a certain amount of bullish pressure almost inevitable.

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