The British pound went back and forth during the week, showing signs of confusion to say the least. It looks as if we are trying to find some type a bottom, but in general this is a market that has been hammered by several different issues involving the Brexit, and now of course we have the US dollar strengthening due to global demand concerns and of course the trade war.
GBP/USD Video 27.05.19
I would direct your attention to the 1.25 level though, because it is the most recent bottom. If we can stay above there, there is still going to be hope for the British pound but clearly we need some type of catalyst to go higher. If we were to break down below the 1.25 level, that would be very negative and it could see this market flushing much lower, perhaps even as low as the 1.20 level. All things being equal, it’s very likely that we will continue to see value hunting just above the 1.25 handle, but it’s difficult to get overly bullish unless of course you can put a small position on and simply hang onto it longer term. In the big scheme of things, this marketplace is one that you are going to need to show a lot of patience with if you are trying to find value in the British pound, which I do believe we are currently seeing. Keep your position size small if you decide to get bullish and recognize that this could be a multi-month move.
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This article was originally posted on FX Empire
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