The British pound sits above the 1.27 level still, which is somewhat bullish in the sense that at least we are breaking down. If we do get below that level though, I fully anticipate that this market will probably reach towards 1.25 handle. With the British government struggling to come to an agreement when it comes to the Brexit, I think there is still quite a bit of significant downside risk. However, we are holding steady and therefore some hope has to be taken from that.
GBP/USD Video 10.01.19
If we were to break above the 1.28 level, I think at that point we could start looking towards the 200 day exponential moving average, pictured in black on the chart. However, I do recognize that there are more potentially bad things that are going to happen than good, so I would not be as comfortable taking that position as I would’ve break down below the 1.27 handle. Obviously, a lot of bad news is priced into the British pound already, so I’m not looking for some type of meltdown. Based upon the descending triangle, we should be looking towards the 1.22 handle longer term, but obviously we need to get through the 1.25 level before we can have that conversation. The US dollar has helped the British pound as of late, due mainly to the conversation coming out of Jerome Powell about being a bit more nuanced with the rate hike schedule. We will have to see, but it looks as his most people are starting expect the Fed to slow down so that could alleviate some of the downward pressure.
This article was originally posted on FX Empire
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