• The British Pound has outperformed most of its contemporaries against the US dollar, so even if the US dollar finds quite a bit of strength, it is more likely than not that the British Pound drifts lower, but at a slower speed.
• The British Pound initially rallied during the trading session on Friday, but then gave back quite a bit of significant momentum.
• With that being the case, traders will likely look at this through the prism of a market that is going to try to either break out or form a bit of a consolidation range.
   

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I do believe that in the next couple of weeks we will make a significant decision, but as things stand right now, it looks very much like a market that I think is going to continue to see a lot of questions asked of it near the 1.35 level.
 

Levels to Watch

The 1.35 level is a level that I think has been important multiple times. If we pull back from here, and I think we could, the 1.34 level is an area that would be your initial target. Breaking down below there, then opens up the possibility of a drop down to the 1.32 level. All things being equal, I suspect that might be the initial move to a bigger pullback.
 

However, we have to understand that the US dollar will probably move in the same direction against most currencies and not just this one. So, with this, I think you have a scenario where if we were to break above the 1.36 level, then it is obvious that we have a much bigger move to the upside waiting to happen, perhaps to the 1.38 level. I do expect a lot of choppy and noisy behavior, but I also recognize that the British Pound has outperformed most of its contemporaries against the US dollar. We are at a major point of inflection that we need to be watching.

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