- The British Pound has fallen a bit during the trading session on Friday, which in and of itself isn't surprising because we've seen it do that all week.
- However, this time, it doesn't look like it's ready to bounce as much as it was previously, and therefore I think you continue to see a lot of consolidation in this area, but the most important clue out of all of this is that the British Pound simply cannot hang on to the gains.
The 1.21 level underneath of course is a significant area from the past that I think comes into play with Market Memory 4 support. If we break down below the 1.21 level, then it opens up the possibility of a move to the 1.20 level. Any rally at this point in time should end up being a nice selling opportunity at the first signs of exhaustion, and that's exactly how I've been playing this pair.
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The 1.2350 level is an area that I think will be very difficult to get above. And if we can clear that, then you would be looking at 1.25. It's really not until we get above there that I'd be convinced about the strength of the British pound, and I would also have to see the U S dollar fall apart in multiple currencies, not just this one. This is not a British pound story as much as it is a U S dollar story over the longer term.
Yes, there are budgetary concerns in Great Britain, but right now the US dollar is like a wrecking ball for pretty much everything, and the pound of course will not be immune to that. A breakdown below the 1.21 level again opens up the 1.20 level. Anything below there becomes really ugly, really fast. You can see that the trajectory of this market has been on the downside for a while, and it was quite vicious to get down here so it's not a huge surprise that occasionally we will consolidate like we have been over the last week or so.
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