The British pound has rallied initially during the trading session on Tuesday to slam into the 1.30 level yet again. However, this is at least the sixth time in the last couple of months we have tested this area, and it should also be noted that the market has fallen hard from there only to bounce off of the 50 day EMA. Because of that, it does look like there is still some resiliency here, so with that being the case it is likely that we will continue to see at least some fight in the British pound and you can take a look at the last several sessions and see just how many people are willing to step in and pick it up.
A lot of what we are seeing is a reaction to the European Union saying that they are going to ignore the October 15 deadline to get a deal done and called the bluff of the United Kingdom as far as leaving the EU without any type of deal. At this point, we are still back in the latest “he said/she said” type of trading, and therefore you cannot put too much if you see this on in the one particular statement. That being said, it looks as if the markets still favor the European Union in this fight, and therefore with bad news coming out for the deal, that will almost certainly work more against the British pound that it will the Euro.
The real winner in this situation would obviously be the US dollar, so there is also an argument to be made that you can buy or sell both the Euro and the Pound against the US dollar depending on what happens next. If we can break above the 1.3050 level on a daily close in this pair, then we should go looking towards the highs. #GBP/JPY##FX#
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