- The British pound has shot straight up in the air during the early hours on Monday and then just kind of stayed there.
- That being said, the market is likely to continue to see a lot of back and forth.
- With that being the case, I think we do have a certain amount of overhang of resistance here, probably extending all the way to the 1.3650 level.
We did try to break above the 1.36 level previously and then fell. Now it looks like we’re showing signs of strength, but I would also point out that the US dollar seems to be at least pushing back a little bit later in the session. So, what I think we have here is a market that’s still bullish. And I do think the British pound is a little bit of an outlier in comparison to other currencies around the world, but I think we’ve got a bullish to sideways market here. The 1.34 level is your floor. And I do think as long as we can stay above there, you’re probably looking for more range bound trading.
Below 1.34 Matters
However, if we break down below the 1.34 level and you see the US dollar strengthening against other currencies such as the Euro, it might be time to shift our focus to the downside. Right now, though, I do think that out of all of the major currencies, the British pound probably continue to outperform many of the other ones against the US dollar as they don’t have the trade war concerns in the United Kingdom that so many other countries might have to deal with.
They have an agreement with the Americans, which ironically, they hadn’t had an agreement for years before all of this started. So interesting times that the UK would be the one that signs on the dotted line first. If we break above the 1.3650 level, I don’t think there’s much stopping us from going to the 1.40 level.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.