The British pound rallied during the week, reaching towards 1.13 level, which of course is very crucial. I think at this point, the market should continue to be skittish, as we hear conflicting stories about a possible Brexit deal.
The British pound rallied during the week, testing the 1.13 level. That’s an area that has caused a certain amount of psychological resistance, but if we can break above the top of the weekly candle stick, I think that the market will continue to go much higher. Short-term pullbacks will be supported at the 1.2750 level, and I think at this point we are more than likely going to see more risk to the upside than the down. I think at this point, we will continue to move on rumors more than anything else, but it does look like an area where there could be a lot of support involved. If we were to break down below the candle stick that turned around think that the 1.2750 level, the market will continue to go much lower.
I believe volatility will be one thing you can count on in this market, but how can you expect anything different with the negotiations going on? I believe that eventually we will get some type of solution or lack of a solution to the Brexit, and that will send the British pound higher as it will become of value play. That doesn’t mean that it will go straight up in the meantime, quite frankly would not surprise me at all to see the occasional pullback as people don’t know what to do yet. In general, I think that this market has much more risk to the upside than the down, but it’s not can it be easy.