British pound rallies into resistance on Wednesday

The British pound has had a pretty significantly eventful day during Wednesday’s hours, reaching towards the psychologically important 1.33 level, an area that was structural support previously, and now should be structural resistance. I think that the market will continue to be very noisy, but it is most decidedly in a negative tone. If we can roll over from here, this will be a simple continuation of the gentle breakdown that we have seen in Sterling and should end up being a nice selling opportunity.

The alternate scenario of course is that we continue to go higher and go looking towards 1.35 level bone, which is the scene of the uptrend line crossing. That level being broken to the upside would be extraordinarily bullish, but at this point I just don’t see that happening. I believe that the summer time is going to be good for the greenback, and although the Bank of England is likely to have an interest rate hike sometime in the next 12 months, it’s far less than the expected three or four that we should see the coming out of the Federal Reserve. That eventually will continue to favor the greenback, and that of course any political uncertainty will as well. Pay attention to the 10-year note, that should give you an idea as to where the greenback goes, but currently all things look very positive for the Dollar. I suspect we will be talking about 1.30 over the next several weeks.