The British pound has rallied slightly during the trading session on Friday, showing signs of support yet again at the 1.29 level. I think at this point, the market is likely to go looking towards 1.30 level but will probably find a bit of resistance just above there in the form of the 50 day EMA. Breaking above the 50 day EMA then allows the market to look towards the 1.32 handle. Ultimately, this is a market that continues to chop around as one would expect with the British economy still at the mercy of negotiations with the EU.
GBP/USD Video 24.02.20
Having said all of that, the British economy has been much more resilient than most people had anticipated, and therefore I think that the British pound will be thought of as undervalued by a lot of longer-term traders. This doesn’t mean that you jump in with both feet, rather that the market rallying from here isn’t a huge surprise at this point in time.
To the downside, the market should have plenty of support at multiple levels, not the least of which of course is going to be the 200 day EMA. However, the 1.29 level is supportive, just as the 1.28 level is. Looking at the chart, it’s likely that the markets will find plenty of value hunters underneath. I have no interest in shorting the British pound, but I recognize that the market is going to be difficult to hang on to unless of course something changes with the attitude of the negotiations. On the other side of the equation is the US dollar, so that does make this a bit sluggish to the upside.
This article was originally posted on FX Empire
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