The British pound drift in a bit higher during the session on Wednesday, as the 1.3650 level has held as support. This is an area that is stabilized as resistance from a previous gap, that formed after the Brexit vote. Because of this, I think that a break above the 1.3650 level is a very positive sign, and should send this market much higher. In the meantime, I would suspect that we would have short-term pullbacks occasionally, but those should be buying opportunities. While we have struggle to go anywhere over the last several sessions, the reality is that we have sat relatively still, and that’s a sign that the market believes we can break out. Simply put, people are not afraid at this point. If we do get that break out, this market could go much higher, perhaps reaching towards the 1.40 level next, and then eventually the 1.50 level over the longer term.
Bank of England
The Bank of England is watching and inflation in general, as the markets continue to be very volatile. Currently, looks as if the British economy is starting to heat up below there, and there has been mentioned by the Bank of England that the market may expect a couple of interest rates coming soon, as they embark on a tightening cycle. Also, we have the uncertainty around the divorce from the European Union, so one would have to expect extreme amounts of choppiness. As things look now though, every time we pull back, it should be a buying opportunity. It is not until we break below the 1.30 level that I would consider selling this market, and that seems all but impossible as we have seen such bullish pressure over the last several weeks.
Written by FX Empire