British pound rallies only to give back gains against yen

The British pound broke higher during the trading session on Monday, perhaps in a bit of a “risk on” move. We are awaiting the results of the US and North Korea meeting, and I think there is a certain amount of anticipation of good news. This pair tends to be very sensitive to risk appetite overall and geopolitical events, so it would not surprise me at all to see this market rally. However, keep in mind that we could get negative headlines coming out of that meeting, which would turn everything around and be very negative for this pair.

In general, I believe that the market will go looking towards the ¥148 level again, and I also believe that we will eventually break above there. That will be especially true if good headlines come out after the meeting today. That could send this market looking towards the ¥150 level above which has been massive resistance. The alternate scenario of course is that some type of negative headline comes out, which could send this market looking for the ¥146 level, and then possibly the ¥145 level after that. Market participants continue to find plenty of value in this pair though, so I believe that even a break down could eventually offer an opportunity for those who are bullish. At this point, I think it would take something pretty negative to turn the tide against the recent uptrend that we have seen.