The British pound initially tried to rally to the week but then struggled to hang onto gains. We ended up turning around and rolling over quite drastically, breaking down significantly. The market looks as if it continues to go lower and towards the 1.20 level, an area that of course will attract a lot of attention. I do believe that it’s only a matter of time before rallies get squashed, as the US dollar is of course a safety currency, so it makes quite a bit of sense that even though the Federal Reserve is likely to cut rates, that we will see money flowing towards the greenback as money flows into bonds.
GBP/USD Video 12.08.19
Ultimately, the British pound is a bit toxic at this point but I do think given enough time there will be an opportunity to pick up the British pound on the cheap level and hold onto that trade for quite some time. However, we need to see the market freak out and completely melt down after the “no deal Brexit.” At that point, careers will be made picking up the British pound for what will certainly be a turnaround. However, in the meantime we continue to fade rallies and I do think we continue to see this market grind towards the 1.20 level on route towards the 1.15 level after that break down. We have a couple of months’ worth of pain coming, but eventually this thing will try to turn around.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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