The British pound has broken down during the course of the month of November as the British pound continues to struggle. However, as I record this we are on the uptrend line and there could be supported just waiting to happen. I think this market could be a big move or, if we can break below the uptrend line, we could break down rather significantly. Interestingly enough, I think that the real “tell” of this market would be found in the GBP/USD pair.
The British pound breaks down below the 1.27 level against the US dollar, that would probably be massive brutality waiting for the British pound in general, as we continue to see concerns about the Brexit, and that of course could continue to punish the Pound overall. After all, there are a lot of concerns as to whether the British Parliament will pass the potential agreement between the European Union and Teresa May. She has backpedaled a little bit to suggest that perhaps Parliament could change a few things, but the biggest problem with that is you would have to assume that the European Union would be willing to do that, and so far they have shown no signs of willing to bed. Because of this, I think the reality of a “no deal Brexit” is starting to become a real threat.
What could really send this market much lower is if we get a decent agreement between the Americans and the Chinese, which will be good for commodity currencies, but at the same time we don’t have a deal for the Brexit. That would be the “perfect storm” for a major break down. I believe that rallies are to be sold in this market, unless of course we can break above the 1.95 handle. If that were to happen, then we would have to rethink things and assume that the overall uptrend that’s been in effect since August still has legs. Otherwise, we could be looking at a move down to the 1.74 handle.