The Pound Is Still Poised to See Lower Levels
Since the low on June 21, the pound has risen quite sharply against the U.S. dollar yet the pound could go lower, asserts Mike Golembesky, an Elliott Wave analyst covering U.S. indexes, volatility instruments, and forex in his debut commentary today.
In April I wrote an article discussing the potential inflection point that the GBP/USD was closing in on ahead of the UK elections, which were scheduled to occur on June 8. At the time the GBP/USD was trading at the 1.2860 level, and I was looking for the pound (GPB) to move higher into the longer-term resistance zone that I had been watching on the pair since the 2016 low was struck.
In late May the pound poked its head just into this resistance zone prior to moving lower into the end of May. The pound then retraced back higher as the June 8 election date approached topping in the overnight session on June 7, then proceeded to move sharply lower bottoming on June 12. This was followed by another corrective retrace to the upside followed by one more final low on June 21.
Since this low on June 21, the pound has risen quite sharply against the U.S. dollar and has once again re-tested the May highs and the lower end of the larger degree resistance zone, which currently comes in at 1.3012-1.3303.
I do still view this zone as a significant inflection point, and as long as we do not see a sustained break of that resistance zone, the pound is still poised to see lower levels in the near term.
When there are sharp moves in financial instruments, pundits and the public at large will typically look toward some exogenous event to explain these moves.