The British Pound has enjoyed high levels of demand over the last two months or so. There have been a few developments in the UK such as the triggering of Article 50 and the announcement of snap general elections on June 8^th.  

But, the real reason behind this 8-9 cent surge is short covering. Forex traders have been shorting the GBP for a long time, especially since the Brexit referendum when the pound lost about a fifth/sixth of its value.

They had a few attempts to break 1.20, but after failing, they came to the conclusion that a retracement higher would be needed before having another go at the bottom. The retracement happened and we are coming up against 1.30 right now.

GBP/USD has had three attempts at 1.30 this week, but it has failed to break above it and it has dived back down every time. A couple of hours ago, GBP/USD bulls tried to take out this big resistance level, but without much success and we´re now 50 pips lower.

Knocking on 1.30 one too many times

But, while the buyers have been facing selling pressure near 1.30, the attempts are getting more frequent and the dips lower have been getting shallower. This means that the buyers are gaining confidence seeing as they´re not letting the price slip too much before the next attempt.

No one knows if a support/resistance level will be broken, but we´ve been knocking on this level too often recently. If it goes, I´d try to open a short term buy forex signal just above, targeting 25-30 pips for the initial spike. So, I´ll place a buy pending order above 1.30, with a tight stop below there.