The British pound has broken down significantly during the trading session on Tuesday, breaking to a fresh, new low. This of course is rather impressive, considering that we are at such low levels. At this point in time, it’s very likely that this market is going to go looking towards psychological support underneath. I believe that the 1.2250 level is going to be the initial target, followed by the 1.20 level after that. Short-term rally should end up being selling opportunities, and the 1.25 region should be resistance going forward as it was previously the support.
GBP/USD Video 17.07.19
The British pound is starting to price in an even higher possibility of a “no deal Brexit”, which of course paves the way to much lower pricing. If that’s going to be the case, then the British pound really could start to roll over. I believe that the 1.2250 level is reasonable support, but the real target could be as low as 1.20 given enough time. The fact that we simply cannot find longer-term footing in the British pound, even at this extraordinarily low level and in the face of the Federal Reserve interest rate cuts, shows just how soft the British pound is getting.
Rally should be sold, and it’s not until we break above the 1.2750 level that I can take a rally seriously enough to put a big position on anything between now and then is probably best looked at through the prism of a potential shorting opportunity as it would offer the US dollar “on the cheap.”
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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