- During the Monday trading session, the British pound has been fairly quiet against the US dollar.
- We are in a range at the moment and trying to figure out exactly whether or not the buyers can push the market higher, if we are, in fact, going to start to fall apart.
- As things stand right now, it’s probably worth noting that the 50 Day EMA has offered resistance, but it’s also worth noting that the high price from the Friday session still would qualify as a “lower high” if we were in fact to drop from here.
Questions Remain
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I think there are still a lot of questions asked about whether or not this trend can continue, as we had pulled back rather significantly, but we also have the situation where the market had been so bullish previously. The one thing that I do know is that the British pound has been much stronger against the US dollar than most other currencies, so if this pair starts to fall apart, I think that tells you that the US dollar is about to get very strong, and therefore punish not only the British pound, but other weaker currency such as the Japanese yen, Canadian dollar, New Zealand dollar, and so on.
Alternatively, if this pair rises, then it tells is that the US dollar is probably going to soften a bit, but I actually would prefer to buy the British pound in that environment, because it has outperformed and therefore I don’t feel that there’s any reason to go looking somewhere else to really take advantage of a weaker US dollar. Ultimately, this is a very choppy currency pair, and I think that will continue to be the case in this market, and I think we remain rangebound. In fact, the larger consolidation area, I believe, is between the 1.37 level and the 1.35 level. We are currently right around the middle of that, meaning that we are essentially near “fair value.”
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