• The British Pound fell rather hard during the early hours on Friday as we have dropped below the 1.27 level during the session.
• We have tested the 50-day EMA, so it'll be interesting to see whether or not this offers support.
• At this point, if we break down below the bottom of the candlestick for the session, I think that would be an extraordinarily negative sign and more likely than not send the British pound looking toward the 1.25 level for more support.

On the upside there is an obvious resistance barrier in the form of the 1.28 level which has been like a brick wall. For what it's worth if you look at the weekly chart you can see several wicks that seemingly die near the 1.28 level. So, I do think this is a market that could very well drop.

The US dollar is strengthening mainly due to interest rates and of course, the fact that the Federal Reserve doesn't seem to be in a rush to cut rates is a theme that I've seen all over the forex world, not just in this currency pair. Regardless, GBP/USD is a pair that we need to pay attention to all of the levels mentioned and I think eventually we might get a little bit more of a bigger move, but right now it looks like a lot of the major pairs are simply sideways and noisy.
 

More Sideways Action throughout the Summer

(Click on image to enlarge)

That probably continues through the rest of summer as it does tend to be a choppy time of year anyway. And of course there are a lot of questions about geopolitics, debt, global growth, inflation, and so on. With that I remain somewhat neutral in this pair but if we break down below the bottom of the Friday candlestick, I assume that we will drop towards that 1.25 level. This of course is an area that I think attracts a lot of attention, and therefore traders would more likely than not continue to pay close attention that level and any reaction that we would see there.

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