The British pound rallies initially on Friday only to turn around

The British pound has rallied significantly on Friday, to save the last vestiges of an uptrend as the uptrend line is now at roughly 1.35 below. I think if we can break out above the 1.3650 level, this market will take off to the upside, because it will be a continuation of the overall bullish pressure. However, if we make a fresh, new low, somewhere around the 1.3465 level, the market would unwind rather drastically, probably down to the 1.33 handle followed very quickly by the 1.30 level. This would be in line with the US dollar strength around the world, which we have seen as of late.

However, we have seen a bit of a “risk on” move lately in equities, and that of course tends to have people running away from the greenback. I recognize that the British are very unlikely to raise interest rates in the short term but was recently stated by Mark Carney that an interest rate hike would of course happen by the end of the year. That has lifted the British pound a little bit, and perhaps suggested that the British pound has been a bit oversold. This is going to be a very interesting few weeks, but a decision will need to be made rather soon. Pay attention to those couple of levels I have mentioned.