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The British Pound has rallied just a bit during the early hours on Monday, but it's probably worth noting that the shooting star from Friday still loomed somewhat large. It'll be interesting to see if we can continue to go higher, but I think at this point in time, we are entering that area where things might be a little overstretched.
We'll just have to wait and see how this behaves, but unlike some other currency pairs out there, namely the New Zealand dollar and the Australian dollar, there isn't a ton of direct fundamental influence in this pair with perhaps the exception of CPI during the trading session on Tuesday, I think once we get past that, it's going to be very difficult to justify one way or the other and I think this will become more of a US dollar story. You'll have to watch how the US dollar is behaving against everything else.
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The 200 day EMA currently sits near the 1.27 level, so that's something worth watching as well. If we can break above the 200 day EMA, then it is technically a trend change for a lot of traders, but again, we'll just have to wait and see how that plays out. I do think that we are getting a little overdone against the US dollar in multiple places and when you look at it, through the prism of a longer term chart, we just bounced from a major support level near the 1.21 level.
But it's also worth noting that we have spent most of our time in the last couple of years between 1.21 and 1.2750. So, it might just end up being a sell the rally on exhaustion type of situation as we get top heavy and towards the top of the overall consolidation. Only time will tell, but it certainly looks like we are at least seeing some pushback in favor of the greenback right now. I just don't see the signal to put money to work yet/USD Live Chart
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