The British pound has had a very strong week, breaking from the 1.15 level at the bottom to the 1.22 handle at the top. That is a 700 PIP move in the course of the week, just like we had seen the previous two weeks. This has been an explosive move to the upside but when you look at the last three candlesticks you can see that there is still high potential for the market to drop again. After all, this has been an impressive week, but it hasn’t even taken out the previous week’s range.
GBP/USD Video 30.03.20
Furthermore, the United Kingdom is essentially locked down, but at the same time the Federal Reserve is flooding the market with liquidity. If that’s going to be the case, we are going to get a lot of “push pull” type of action in this pair. I do believe that the British pound is closer to the bottom than the top though, as there has been historic moves to the downside. After all, the British pound is extraordinarily cheap from a longer-term perspective and therefore one would have to think that investors sooner or later will get involved. Because of this, I believe that pullbacks will probably be looked down as favorable buying opportunities for those the longer-term inclined investors.
If the market does break above the 1.25 handle, that would be extraordinarily bullish, as it would just be yet another scenario where the markets are going back and forth chewing up trading accounts. This of course is a real concern, because there is no true directionality with all of these issues globally.
This article was originally posted on FX Empire
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