- The British pound has broken below key support levels, signaling continued weakness toward 1.30 and potentially 1.2750.
- Despite occasional rallies, resistance near 1.32 and broader rate-cut expectations keep the currency under heavy selling pressure.
The British pound has spent the entire session on Tuesday falling apart as we are now well below the 1.31 level. The 1.31 level is an area that I had mentioned over the last couple of days to show signs of support, but it didn’t. So here we find ourselves going much lower. At this point, the 1.30 level seems to be almost assured.
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Going Lower
I believe at this juncture we’re probably even looking at the 1.2750 level before it’s all said and done. That doesn’t mean that it’s going to be easy to get there, and it doesn’t necessarily mean that we are going to get there rapidly. But I would assume that we are in a situation where traders are going to continue to look at this as a market that, anytime you see any rally showing a bit of strength or even stability, you have to look at it through the prism of a market that, at the first signs of trouble, you have to be a seller of.
With that being said, I think you have a scenario where sooner or later we do see a big flush lower, but the candlestick on Tuesday may have been something that needs to be pushed back against at least in the short term. I look at the 1.32 level as a significant resistance barrier and most certainly the 1.3268 level, where the 200-day EMA currently sits, as a major resistance barrier. For what it’s worth, we’ve done nothing but fall for the most part since the September FOMC interest rate decision.
As a result, even though people are counting on the Federal Reserve to cut rates, it looks like there’s some serious fear out there, and we just collapsed through a major support level. If you are a little bit aggressive, you could look for a move down to 1.2750, maybe 1.28, based on the measured move of the consolidation that we just absolutely fell through. I’ve got no interest in buying the British pound. It looks like traders are betting on the Bank of England cutting rates soon, and therefore, I think the pound remains under pressure.
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