British pound testing major resistance as the week ends

The British pound has rallied significantly during the week, reaching towards the 1.43 level during the Friday session. We are starting to see a bit of a push back in that area, but that’s not a huge surprise considering that it had been so resistive in the past. I believe that the market should continue to be choppy, but with the Bank of England looking likely to raise interest rates relatively soon, I think that the British pound will continue to attract money. I believe that this is a “buy the dips” market, and we may just get that dip soon.

I look at this chart and recognize the 1.40 level to be relatively supportive, followed by the massive uptrend line. I have no interest in shorting the British pound, looks far too strong against other currencies around the world, not just the US dollar. I think that money is starting to flow towards the British pound overall and the stock markets in London. Ultimately, I think that we will go to the 1.45 handle next, and then breaking above that should free the market to go to the 1.50 level, an area that has been historically important in both directions.

My suspicion is that we will get the occasional pullback to take advantage of, and that’s probably the best way to trade this market, looking at it in a value-oriented mindset. Think of the British pound as being “cheap” when we pull back.