- The British pound has rallied again during the early hours on Monday as we continue to see plenty of support near the 1.34 level.
- This is an area that continues to be noisy overall, and therefore it is worth noting that the market is essentially hanging around in the same range that we have been in for a while, therefore I think we need to determine whether or not we are going to make a bigger move.
Range bound?
At this point we have to determine whether or not we remain range bound, and I think you have to lean toward a definitive “yes” at the moment, which of course will have a lot of people thinking that we are going to continue to be a “buy on the dips” type of situation. At this point, it’s not really until we break down below the 1.3350 level that I would be concerned about the British pound, because it’s also worth noting that even when the US dollar was strong last year, the British pound was by far the most resilient currency against it.
If we do break down below the 1.3350 level, then we will be paying close attention to the 200 Day EMA, which is a long-term trend determining indicator, and anything below there would of course have people very interested in shorting this pair from a longer-term standpoint. It would also more likely than not go the US dollar strengthening against multiple other currencies, so despite the fact that we might see the British pound fall at that point, you probably have even more profits to be made by the US dollar against other major currency such as the euro or the Canadian dollar. Regardless, even if you are not trading this pair, I think it is very important to pay attention to the British pound because it could be a bit of a secondary indicator.
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