The GBP/USD pair has rallied significantly during the session on Wednesday after falling before that. I think the 1.40 level above is going to be a target initially, but if we can break above there, and perhaps more importantly the 1.4050 level, the market should continue to go even higher, reaching towards the 1.4150 handle. I do believe in the longer-term uptrend, as I think that the US dollar will continue to struggle in general. This will be especially true if the treasury markets continue to sell off, as we have seen a lot of negativity in them recently.
The alternate scenario is that we pull back from here, but I think there is plenty of support underneath, especially near the 1.38 handle, so I think that it’s only a matter of time before we get the opportunity to pick up value, and I think a lot of longer-term traders are starting to look at the situation in that light. I don’t have any interest in shorting, least not until we break down below what I think is very vital, the 1.3650 level. If we were to break down below there, the market would breakdown rather significantly, but I highly doubt we are going to see that happen anytime soon. Overall, I believe that the market will go to the 1.45 handle above, which is the top of a significant consolidation area that we had seen quite some time ago. It is going to be very noisy, but I think longer-term the buyers will win.