“In the big picture, the British Pound ETF (FXB) has recognized the Schiff channel drawn on the monthly chart above. An upward move to test near the eighth harmonic line is likely, and even a test of the quarter harmonic line is possible. Meanwhile, typical Fibonacci retracement ratios of the wave distance suggest price should find resistance near the 23.6% measurement at 126.60 and near the 38.2% measurement at 132.30,” according to See It Market.

Currency hedged ETFs, including the iShares Currency Hedged MSCI United Kingdom ETF (NYSEArca: HEWU), WisdomTree United Kingdom Hedged Equity Fund (NasdaqGM: DXPS) and Deutsche X-Trackers MSCI United Kingdom Hedged Equity ETF (NYSEArca: DBUK), are benefiting from sterling weakness.

The iShares MSCI United Kingdom ETF (NYSEArca: EWU), the largest U.K. ETF trading in the U.S., is not currency hedged, meaning it can be vulnerable to pound weakness.

“It is probably best to have conservative expectations for a corrective bounce. If the elliott wave correction takes the form of a triangle, then the lower resistance area shown on the chart might put a cap on the highest part of the bounce,” according to See It Market’s technical analysis of FXB.

For more information on the GBP, visit our British pound category.