GBP/USD bouncing around in range bound trading

The British pound has been very noisy during the trading session on Tuesday, as we continue to see a lot of noise in this market, just above the 1.40 level. That’s an area that has a certain amount of psychological importance tied to it, as it is a large, round, psychologically significant number. That’s an area that I look at as potential “fair value”, as there seems to be a bit of support and resistance recently. I believe that the market should continue to dance around this area until we get some type of clarity, perhaps in the form of the jobs number coming out on Friday.

This is an interesting currency pair, because both economies are likely to see higher interest rates over the next several months, and I think that the pair will continue to be noisy because of this. I think that if the market can pick up a bit of momentum, we are likely to see this market go looking towards the 1.43 level, which is significant resistance on longer-term charts. I think that a break above there then frees the GBP/USD pair to go to the 1.45 level. The alternate scenario is that we test the uptrend line on the longer-term charts, and perhaps go down to the 1.3650 level. I think that the market is going to continue to be one that you should be cautious with, but if we rally a bit I would be the first to put a bit of money to work. After that, I would add as the market proves me correct.