The GBP/USD pair went sideways initially during the day on Wednesday, but then found massive support at the 1.26 level as the word got out that at least one of the Bank of England members thinks that interest rates are going to go higher than initially thought. That being the case, I think that the market should continue to reach towards the upside, but if we breakdown below the 1.26 handle, the market should then reach towards the 1.25 level after that. Alternately, I believe that the impulsive candle could signify that we are ready to go towards the 1.28 level above. That is an area that being broken to the upside should be a free ticket to the 1.2975 handle.
Continued volatility
The market should continue to see quite a bit of volatility, as there are a lot of headlines affecting the British pound in general, especially as we are reaching around after headlines coming out of both London and Brussels will cause trouble. Because of that, it’s going to be difficult to hang a lot of money into the market in one shot, so regardless of what happens, I think that as a trade goes in your favor, you should probably add slowly if you choose to be involved. On the other hand, there is also the possibility that you could just stay on the sidelines, as the British pound is going to be one of the most volatile currencies in the Forex world over the next several months, as we need to figure out where we are going next with the Brexit negotiations.
Written by FX Empire