The cable has been flittering around the 1.5650 level for a while now. Finally, on Wednesday we saw it give way. The move over the last several weeks has been brutal, but the truth is that the Dollar is the most wanted currency at the moment, and it makes sense that a currency like the Pound that is so highly attached to the European Union should be sold in favor of the Greenback Quite frankly, until the situation calms down in Europe, the Pound will suffer as a result of the EU being such a big market for British firms.
The 1.5650 level was one that I thought was fairly obvious. I also thought that the 1.55 level would be significant as well. It is telling that both of these levels were overcome in one move, and this shouldn’t leave much of a doubt as to where the momentum is heading. The bearishness is simply amazing.
1.53 is next
The next support level that I see is the 1.53 level in this market. The level is a strong one, and a bounce could be coming from that level. After all, the UK isn’t the European Union, and as a result it shouldn’t be as bad as the region. After all, the Brits have a chance to make one choice, not 17 countries trying to get to come kind of consensus. The market will continue to struggle going forward, and the rallies will fail as the “risk off” attitude continues in the global markets. As of this point in time, there is little to suggest that the economy is suddenly going to turn around.
.png "GBPUSD Daily 53112")
The pair could have sudden pops on rumors and announcements, but the situation in Europe is going to take years to put back together, and as a result the Brits will muddle along in the process. The pair will provide plenty of selling opportunities on rallies and fresh lows. While I cannot call for it right away, I think 1.53 gives way eventually – and we go much lower over the next several months.