British Pound Continues to Grind to Upside

Yes, it’s been a nice rally as of late, but the reality is that it is but a blip on the radar of what we had seen for so long.

The British pound continued to grind to the upside on Monday, although it should be noted that it was a very quiet session as Americans were away for Memorial Day. Ultimately, we also have the 50-day EMA above that should offer resistance as well. Regardless, even if we rally from here, I think that it is going to be more of a grind higher and it will probably set up for a longer-term selling opportunity.

The 1.30 level above is massive resistance just waiting to happen because it is “market memory” that comes into play here. It had been previous support, so I would certainly think that the sellers would be interested in getting involved again. The 1.30 level is also a large, round, psychologically significant figure, so in and of itself it could cause a certain amount of noise.

Ultimately, this is a market that has been in a downtrend for quite some time, and I think that any breakdown should be looked at as a potential selling opportunity. If we break down below the 1.25 on a daily close, that will more than likely continue to put sellers back into the marketplace. The 1.22 level underneath could be the target, perhaps even the 1.20 level after that. The market has been in a downtrend for quite a few different reasons, not the least of which would be risk aversion. There are still plenty of reasons to think that fear will be out there, which would have money drive into the US dollar.

Part of what we have been seeing lately has been yields dropping in America, but we have sold off so drastically that a bit of a bounce had to happen. Ultimately, this is a market that will eventually start to look at people buying bonds as driving up demand for the greenback as well. In fact, it’s not till we break above the 1.31 level that I would consider buying the British pound, and until the Bank of England changes its overall outlook on interest rate hikes. Yes, it’s been a nice rally as of late, but the reality is that it is but a blip on the radar of what we had seen for so long. I’m looking for signs of exhaustion to start selling again.


Leave a Reply

Your email address will not be published. Required fields are marked *

Risk warning: Trading Forex (foreign exchange) or CFDs (contracts for difference) on margin carries a high level of risk and may not be suitable for all investors. There is a possibility that you may sustain a loss equal to or greater than your entire investment. Therefore, you should not invest or risk money that you cannot afford to lose. Before using ExcaliburFXTrade services, please acknowledge all of the risks associated with trading.

The content of this website must not be construed as personal advice. We recommend that you seek advice from an independent financial advisor.

The information on this website is not directed to residents of certain jurisdictions such as United States, Canada, Iran, Cuba, France, and some other regions, and is not intended for distribution to, or use by, any person in any countries or jurisdictions where such distribution or use would be contrary to local law or regulation.

© 2018 - 2024 All Rights Reserved.