The British pound rallied a bit during the session on Monday, bouncing from the 1.3050 region. This is an area that defines the bottom of recent
The British pound rallied a bit during the session on Monday, bouncing from the 1.3050 region. This is an area that defines the bottom of recent consolidation, so it’s not a huge surprise that we were to bounce from there. If we were to rally from here, I suspect that the 1.3250 level will be the initial target. That level has been of interest by currency traders for some time, and I would be more than willing to take profit at that point. This is because I don’t see anything to break the consolidation in the short term, and I recognize that there is a significant amount of support underneath. Ultimately, the 1.30 level underneath should continue to be an area worth watching, as it is a confluence of not only horizontal support, but also an uptrend line. If we were to break down below there, it is a market moving event that should send this market to the downside.
The alternate scenario of course is a continuation of the overall consolidation, which is something that I suspect we will continue to see that. If we were to break above the 1.33 handle, then we are free to go to the 1.35 level beyond that. I think that the British pound will continue to be very volatile, because on one hand we have inflationary pressures showing up in the United Kingdom, but there are a lot of concerns about what’s going to happen down the road as leaving the European Union is a bold move. I think we will continue to see a lot of volatility, but overall, I think eventually the buyers will step into the market and try to continue to the upside. I do not think that happens in the short term though, and therefore patience will be needed to build larger positions.
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.