The British pound initially rally during the Monday session, but pulled back to the opening price in order to find buying pressure. It did, so therefore we continue to grind higher, and it looks as if the British pound is going to pick up against the US dollar. The British pound recently got hammered due to less than expected CPI figures, but this seems to be driven more by US dollar weakness than anything else. In fact, I think the British pound is almost like a sideshow when it comes to this pair, because currently Forex traders around the world are selling the US dollar against almost everything. Americans will be any better, and as I record this they are jumping on the bandwagon as well. I think it’s only a matter of time before the market reaches towards the 1.13 level, and if we can break above there, the market should then go to the 1.3450 level over the longer term.
Buying dips
I believe that the market is going to continue to offer buying opportunities on dips, and the 1.30 level could be psychologically supportive from this point on. Given enough time, I do think that we reach towards 1.3450 level but is can you take a lot of effort to get there obviously. Dips continue to offer value in the British pound, or more importantly, offer an overbought position in the US dollar which is essentially what’s causing this market to move the way it is. Obviously, this market will be volatile as all Forex pairs are, and of course there are a lot of headline risks when it comes to the British pound, but given enough time I do think that the buyers will win. Selling isn’t a thought currently.
Written by FX Empire