The British pound rallied a bit at the open on Monday, but then broke down rather significantly as rumors start to appear in London that a general election may be called between now and the Brexit date. At this point though, I think it’s obvious that it’s going to take very little to send the Pound lower. Ultimately, I think at this point the market will eventually break down below the 1.0 level and go much lower. In the short term I look at rallies as selling opportunities, as I see British pound weakness across the board.
GBP/USD Video 03.09.19
You should keep in mind that the Americans were away for Labor Day though, so the liquidity may have been a bit of an issue. Ultimately, I think that this market probably find plenty of reasons to fall, perhaps it is just a general “risk off” trade going forward, but that would have the same effect. Money would flow into the US Treasury markets, and that of course could send the US dollar much higher against most currencies, and with the British pound having the added problems within its own countries, then it makes quite a bit of sense that this pair will be no exception. If we break below that 1.0 level I will be looking for a move to the 1.18 handle, and then possibly even the 1.15 level after that. I do not see an opportunity to buy Sterling until after the Brexit happens.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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