The British pound has rally during the day on Thursday, breaking above the 1.40 level. That is a level that of course is going to attract a lot of attention as it is a large, round, psychologically significant number. I believe that the British pound breaking above the 1.40 level previously was a very bullish sign, and I think that we will continue to see gains. That doesn’t mean that we are going to go straight out, and I think it will be more of a grind towards the 1.43 level above, which was the recent high.
You can see that the 50-day exponential moving average is just below, and it has turned decidedly positive. I believe it will offer dynamic support just below the 1.40 level as well, so at this point I have no interest in selling this market, I believe that the weakness in the US dollar will more than likely continue, and that the British pound will be a beneficiary of that weakness. Beyond that, the British pound is historically cheap, and I think that a lot of value hunters are ready to come in and start buying.
As mentioned previously, we have recently made a high at the 1.43 level, and I think that level will offer a bit of a push back. Nonetheless, I still believe that we go to the 1.45 handle, and that of course beyond longer term. It’ll be noisy, but I continue to look at this is a “buy the dips” scenario.