The British pound initially drifted a little bit lower during the trading session on Tuesday but continues to find support at the 1.15 level. This is an extraordinarily low level to say the least, and the British pound is most certainly oversold at this point. The question now is whether or not this is simply going to be consolidation before another move to the downside, or if it is the market trying to form a base in order to bounce from here. The 1.20 level above is the initial target on any significant bounce, followed by the 1.2250 level. All things being equal, I do think that the market will probably continue to be very noisy, and with the United Kingdom and lockdown it certainly doesn’t help the British pound. That being said, this thing is completely oversold.
GBP/USD Video 25.03.20
The alternate scenario beyond a bounce would be a return to the 1.15 handle, and a breakdown below that level. If we did do that, the 1.1250 level would be my next target, followed by the 1.10 handle after that. Ultimately, this is going to be a great “buy-and-hold” opportunity eventually, but it’s probably a bit early to suggest that right now. This will be especially true if the US economy can stay somewhat resilient and not get hit too hard by the coronavirus effect. The market does have a habit of having “rip your face off rallies” in the middle of massive bear markets, so don’t be surprised if we get significant momentum to the upside based upon some type of good news. However, they also do tend to pullback in order to confirm a bottom.
This article was originally posted on FX Empire
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