British pound shows signs of strength on Monday

The British pound has rallied a bit during the day on Monday, breaking towards 1.34 level above. I believe that the short-term pullback that we are seeing on the hourly chart will end up being a buying opportunity, as we have formed a massive hammer on the weekly chart. That is a very bullish sign, and it means that we are likely to see longer-term traders try to put money to work in this market. If we can get good headlines globally, it’s likely that we will continue to see a move away from the US dollar, and of course one of the best barometers will be the 10 year treasury note. If the interest rates fall, that should be reason enough for this market to continue to go higher.

Beyond that, pay attention to the overall risk appetite around the world, and of course any headlines coming out about the European Union and United Kingdom divorce proceedings. I think that ultimately, the market will try to rally a bit, and reach towards the 1.35 level above. Longer-term, I believe that we will need to make some type of situation. I think that if we break down to a fresh, new low, then the market should continue to go towards 1.30 level underneath. I think that the US dollar of course is going to be the main driver in this market more than anything else, as we have been so strong in the US dollar. But I believe that we will continue to see a lot of noise regardless.