The British pound fell mid-day on Tuesday, slicing through the 1.32 level to show signs of weakness again. However, I think there’s even more support at the 1.31 level underneath to keep the market afloat. Overall, I think that the market continues to be very noisy, mainly because we are still not very sure how the whole Brexit thing is going to play out. Because of this, keep in mind that there will be headlines occasionally that will cause issues going forward. I do think that eventually the British pound turns around, but right now we are obviously in the throes of overreaction to every little rumor, so therefore the British pound is one of the most difficult currencies trade right now.
If we can turn around and break above the 1.32 level, I think that we would probably rally back towards the 1.33 level again. However, I would be cautious about buying this market until we break above that level on a daily close. Alternately, if we do continue to grind lower I think it would be very difficult to write down below the 1.31 handle, which of course is massive support. I think that would be a nice buying opportunity based upon value, unless things deteriorate rapidly. Obviously, the US dollar is one of the strongest currencies in the world, but I think playing these couple of levels makes the most sense as things are so erratic in cable.