The British Pound Suddenly Reverses Course

Perhaps as a great irony, the British pound (FXB) is suddenly losing favor even as the euro appears to stabilize in the wake of the latest drama in Greece. Since touching the 0.70 level last week, the euro has made steady gains against the British pound as seen here in EUR/GBP.

The euro is bouncing yet again against the British pound

Now, the British pound has made two critical breakdowns that have me starting to rethink my recent bullishness.

The Japanese yen (FXY) is currently surging against all major currencies; the impact on the recent uptrend for GBP/JPY is particularly dramatic. The primary uptrend has ended with GBP/JPY diving deep into oversold territory well below the lower-Bollinger Band (aka the “BB”, this band describes the number of standard deviations away from the 20-day moving average (DMA)).

The selling pressure has intensified against the Japanese yen in what now looks like a growing oversold (panic) move

The “final straw” has come with a breakdown against the Swiss franc (FXF). Note how the 200DMA seems to hold as resistance. The convergence with the 50DMA could provide an even tighter seal to the upside for some time to come.

The British pound still cannot quite regain its former (recovery) momentum against the Swiss franc

I am still looking for the British pound to bounce back in due time, especially if we actually get some constructive news out of Greece. However, the recent bout of selling has definitely cooled my heels until I see a fresh positive catalyst coming from the economic numbers in the United Kingdom.

The 200DMA is the next big test for the British pound against the U.S. dollar