GBP/USD continues to struggle with the 1.43 level

The British pound initially tried to rally during the week but found the area around the 1.43 level to be far too resistive to continue going higher. The fact that we rolled over towards the 1.40 level suggests to me that we have a lot of work to do. I think that the 1.40 level has a certain amount of psychological importance, and if we break down below there it could be somewhat negative for this market. Once we get that breakdown, I anticipate that the next major support level is somewhere near the 1.37 level.

The uptrend line of course is something that you should be paying attention to, as there is a lot of support based upon it. That defines the uptrend, but I think at this point we could get a little bit of a pullback, only to look for signs of life. If we were to break down through the uptrend line, then I think that we could unwind and fall quite significantly, as it would be a complete turn of attitude. If we can break above the 1.43 level, the market should then continue to go much higher, perhaps reaching towards the 1.45 level after that.

The British pound will continue to be very noisy, as we go through the negotiations between the EU and the UK, so I would anticipate a lot of volatility in this market, so therefore it’s difficult to put a lot of money to work right away. However, small positions that you can build on might be a way to play.