The British pound continues to be very noisy, and did in fact break down during the trading session on Wednesday. The 1.3430 level has offered a bit of noise, and of course resistance. Having said that, the market looks likely to roll over from there, perhaps reaching towards the 1.3375 handle. At that level, I would expect to see a certain amount of buying pressure and eventually the pair should continue to grind to the upside. I recognize that the 1.35 level will be a bit structurally resistive, but I believe that we go even higher than that given enough time. It will probably take stronger volume, meaning after New Year’s Day, but eventually I think the buyers come back in and start jumping into the marketplace in favor of the British pound.
If the 1.3333 handle gets broken to the downside, then we begin to test a significant support level at the 1.30 level. That level giving way could send this market down much lower, but I suspect this is the least likely scenario going forward. Rallies I think eventually breaking above the 1.3650 level become a “buy-and-hold” scenario, and I do expect to see that happen sometime during the early part of 2018. After all, there has been an early and somewhat over exaggerated report of the death of the British economy and therefore the currency. Eventually, people will look at the British pound as being cheap, and start to buy this market based upon value if nothing else.
GBP/USD Video 28.12.17
This article was originally posted on FX Empire