The British pound fell against the US dollar during the Monday session, reaching towards the 1.3250 level. This is an area where I would expect to see support though, and on the hourly chart we are starting to form hammers. These hammers offer a sign of hope for the buyers, and I think if we can break above the 1.3320 level, the market is ready to go higher. A breakdown below the 1.3250 level would be negative though, perhaps sending this market down to the 1.30 level longer-term. That’s an area where I anticipate seeing even more support, so I think it’s only a matter of time before the British pound turns around.
The Bank of England looks likely to raise interest rates in the relative near future, so I think that will continue to put bullish pressure on the British pound although there is a lot of uncertainty going forward. I think that the US dollar strengthening is temporary, at least against this particular currency. However, if we break down all you can do is follow the markets. I think the 1.30 level will be a bit of a “floor” in the market, but I also recognize that any rally from here will struggle near the 1.34 handle. It’s not until we break above the 1.3650 level that we get the “all clear” for a buy-and-hold situation, and I don’t think that’s coming as soon as once thought. The bullish pressure should continue to be part of this market, and I think that the noise will continue. However, I think of the short-term the buyers will certainly get aggressive, as we have sold off a bit too quickly for the longer-term trend that we have seen turned around. Ultimately, volatility continues.