British pound rallied significantly during the Tuesday session

The British pound has rallied significantly during the trading session on Tuesday, reaching towards 1.34 level. By pulling back from there, it shows that we continue to see a bit of resistance, but we have rallied from that pullback, so I think that eventually we will try to break to the upside. I believe that the 1.35 level will of course be psychologically important, just as the 1.33 level seems to be structurally important for support. I anticipate seeing quite a bit of noise, and I think that the noisy conditions will be the mainstay of this market.

I think that if we break down below the 1.33 level, and get a daily close below there, it’s likely that we will reach towards the 1.30 level. Otherwise, if we break above the 1.35 handle, the market should continue to go towards 1.3650 level. This is a market that continues to be very noisy, and of course will move in reaction to headlines coming out when it comes to the European Union and the United Kingdom and parting ways. Beyond that, we have questions about whether inflation is starting to pick up in the United Kingdom, so that helps the currency. I think overall though, we are simply seeing the markets trying to recover from an oversold condition. In general, I think that it’s probably best to keep it a smaller trading position in this market as it could be very difficult to deal with this pair over the next several sessions.