The British pound rallied quite nicely during the trading session on Tuesday in the early hours, but has also seen a complete turnaround, and it looks as if the 50 day EMA is going to offer significant resistance. Beyond that, we have the 1.28 level just above there so it makes sense that we continue to see a bit of a struggle. I don’t necessarily think that the British pound is going to collapse, but I do think that a pullback makes quite a bit of sense.
GBP/USD Video 26.06.19
As long as we have the Brexit going on, it’s very unlikely that the British pound can take off against the US dollar like some of the other currencies may be able to after the Federal Reserve about-face. At this point, I suspect this is a market that is trying to build up a larger base, so a pullback from here, as long as we don’t break below the 1.25 handle, could be the beginning of a much more significant reversal pattern.
If we break above the highs from the trading session on Tuesday, that is also a very bullish sign. That would be a break of the 50 day EMA and of course all of the selling pressure during the session. The 1.28 level being in the rearview mirror would of course be a very bullish sign as well, as it could open up a move to the 1.30 level. That being said, the British pound will probably underperform other currencies.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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