The British pound initially pulled back a bit during the trading session on Tuesday but found enough buyers underneath to lift this market a bit higher. The US dollar had been hit against several other currencies, so the British pound got a little bit of a lift. At this point, it looks like the market will continue to try to rally but I think we have a couple of areas that we need to pay attention to above.
GBP/USD Video 05.06.19
The 1.2725 level is significant resistance, just as the 1.28 level is. Any signs of exhaustion will be an imitation to sell as we have not reached a major level underneath at the 1.25 handle. That is an area that should be targeted because it is so important on longer-term charts, and I think that the buyers could step in at that area based upon value. If we were to break down below there the British pound could go much lower. However, at this point I think we are simply going to be looking to fade short-term rallies that show signs of exhaustion that we can take advantage of as it offers “cheap greenbacks.”
To the upside, if we were to somehow break above the 1.28 handle, the market could go to the 1.30 level bone, which is major resistance. Overall though, this is a market that continues to be driven by headlines coming out of the Brexit, so one would have to think that it is only a matter time before something bad is said or done, and we turn right back around.
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