The British pound initially pulled back during the trading session on Thursday but found support near the 1.28 level and turned around to break above the downtrend line, reaching towards the 1.30 level which is also where the 200 day moving average is. At this point, it looks as if the British pound has finally found its footing, and that it’s ready to go higher. I suspect that we are going to go looking towards 1.32 handle again, possibly even the 1.33 level. If we can continue to get calm in the Brexit negotiation headlines, it’s likely that the British pound will continue to go higher.
GBP/USD Video 08.02.19
I believe that the British pound has bottomed longer-term, because the markets tend to look ahead and they are pricing in some type of resolution to the Brexit situation. When you look at the longer-term charts, we are at catastrophically low levels, so unless you believe that the United Kingdom is going to collapse completely, the British pound is probably going to start going higher over the longer-term. Adding more fuel to the fire is that the Federal Reserve is on the sidelines and looking very soft. I think overall, the market does continue to go higher on dips and this has been an excellent opportunity to pick up a bit of value. You can see that this is a great confluence of moving averages, a previous downtrend line, and now we have a hammer forming for the day as well is a break above an inverted hammer from the previous session.
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This article was originally posted on FX Empire
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