The British pound rallies during trading session on Tuesday

The British pound has rallied a bit during the trading session on Tuesday, reaching towards the 1.4175 level. The market looks likely to continue to be very noisy, but keep in mind that this market is likely to continue to see a lot of choppiness and reaction to the overall risk appetite of traders. The 1.40 level underneath should be a massive “floor” in this market, and I think that if we were to break down below there it would be a very negative turn of events, but keep in mind that this is more than likely going to move with the hopes and fears when it comes to trading talks between the United States and China.

Beyond that, the Bank of England is likely to raise interest rates, so that of course helps the British pound too, so I think that the overall attitude of upward mobility should continue. Buying on dips has worked out quite well, but only when you have a small enough position that you can ride out the massive amounts of volatility that are sure to be a major problem. Ultimately, the 1.43 level above is massive resistance, but breaking through there could send this market as high as 1.45 in the short term. The alternate scenario, breaking below the 1.40 level, could unwind this market to the 1.38 level, but that is much less likely now that we have seen such a search higher over the last several sessions. I’m a buyer, but I’m a cautious buyer.