British Pound Falls Sharply Against US Dollar On King’s Comments

The GBPUSD fell in the London trade as BOE’s King said that a weaker pound would help rebalance the economy.  This led to a sharp fall in the GBPUSD toward trendline support at the neckline of the head and shoulder formation.  The neckline level comes in at the 1.6161 level. The low overnight reached 1.6168.  The subsequent bounce has taken GBPUSD back up to a high of 1.6220. There is some topside resistance at the 1.6235 level which should cause some initial resistance (see chart). Above that level look for the 38.2% retracement of the days range at the 1.6282 level to slow a move higher.

On the downside, the 1.6185 level is likely to provide some support while a break of the 1.6160 neckline level should solicit some selling from longer term traders. Note the close is of importance for the Head and Shoulder formation. So if the pair falls, then bounces back higher above the level, be aware.  The market would not be doing what it is supposed to be doing.

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