The pound continues to grind back and forth, but we have some resistance above that keeps this pair somewhat sideways.
GBP/USD
The British pound has been all over the place during the trading session here on Monday as we continue to dance around the 50-day EMA. We fell initially, but we have bounced a bit.
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I think probably one of the few places where you have a currency that deserves to be stronger than the U.S. dollar is the British pound. I like buying short-term pullbacks, with the 1.33 level offering support. But if we were to break above the highs of the Friday or possibly even Thursday candlestick of last week, I'm willing to get long and aim for 1.35, followed by 1.36.
A bit of resistance above
I don't expect this market to break out of the overall consolidation area. If we break down significantly from here and below 1.33, then I'll start to look at the 1.32 level as a potential support level and buying opportunity as well.
Really, at this point, this is a market that I think continues to see a lot of questions asked about whether or not the Federal Reserve is going to be hawkish in their statement and press conference on Wednesday. After all, the market does not expect an interest rate hike coming out of the Fed, but their language will matter.
We are expecting a Federal Reserve hike in December, but that really isn't affecting the market at the moment, other than the fact that we do anticipate that the U.S. dollar will be at least somewhat resilient because of that. Ultimately, though, markets are going to be watching very closely to see if there is a shift in the attitude after the day on Wednesday.
I like the idea of a pullback and buying, but we need perhaps a little bit of the market trying to see some dovishness come out of the Fed, or at least not more hawkishness.
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