British pound continues to walk the trendline

The British pound has been going sideways for several days now, and it looks like the trendline is offering a significant amount of support. I think that if we can break below the 1.3475 handle, the market is likely to continue to go lower, as we have seen US dollar strength for some time interestingly enough, the miss with the CPI number in the United States caused a little bit of a reaction to the upside, but not much. This tells me that the uptrend line could struggle to hold, and if that’s the case it’s only a matter of time before we break down to the 1.33 handle, perhaps even the 1.30 level after that.

I believe that volatility will continue to be a major factor in this market, because we have a lot of concerns beyond the Federal Reserve. We have the negotiations between the United Kingdom and the European Union, and that of course is something that could cause volatility in this currency. If we break down from here, I think we could unwind rather quickly, because this is such a significant uptrend line. Otherwise, if we break above the 1.3650 level, it’s likely that the market will continue to go higher and perhaps reach towards the 1.40 level. Currently, the uptrend line is offering significant support, but I also recognize that the US dollar looks stronger against most currencies around the world lately, and of course the British pound will be any different if that continues.