The British pound initially rallied during the day on Thursday, but we’ve seen this movie before, people are trading the British pound back and forth based upon the latest headlines coming out of Parliament. However, one thing is for sure the British pound is deathly on its back foot. If that’s the case, I think that the 1.27 level is going to continue to be extraordinarily important. If we can break down below that level on a daily close, that probably signifies a move down to the 1.22 level, based upon the size of the descending triangle that we have been trading in. It’s obvious that the sellers come back in every time that somebody rallies this market, so I think it’s only a matter time before we see more negative pressure. After all, how long can it be before we get another negative headline?
GBP/USD Video 07.12.18
I would not be a buyer until we got some type of deal, and even then I would probably wait for some type of stability to show up again. The top of the descending triangle of course continues to put downward pressure, so I think that if we did manage to break above that level it would obviously change the entire outlook for the currency pair. With the jobs number coming out Friday morning, it’s very likely that we will see a lot of volatility anyway. I do believe that rallies are simply looked at as opportunities to short.
This article was originally posted on FX Empire
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