The British pound has initially fallen during the trading session on Monday, but then turned around to rally quite significantly as we had reached the crucial 1.20 level. That is an area that catches a lot of attention, as it is a big figure. At this point, the market looks like we are heading towards the previous consolidation area, which should provide a bit of resistance. After all, the Brexit hasn’t changed, and at this point we are probably looking at a bit of profit taking more than anything else. Ultimately, this is a market that I think shows a lot of noise just above, giving us an opportunity to take advantage of value in the greenback.
GBP/USD Video 13.08.19
If we were to break down below the 1.20 level, then I think the market probably goes looking towards 1.18 handle, possibly even the 1.15 level before it’s all said and done. We have the Brexit deadline on October 31, so I think it’s only a matter of time before the British pound gets a big “flush lower.” After all, we are not going to have any type of resolution from what we have seen. Beyond that, we also have high demand for US treasuries, and that of course drives up demand for the greenback. Ultimately, I think this is a market that we simply fade every time it rallies, with a massive amount of resistance between the 1.2350 level and the 1.50 level. The 50 day EMA is slicing through that area at the same time.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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