The British pound rallied a bit during the trading session on Wednesday, reaching towards the 1.30 level before pulling back a bit. This is a large, round, psychologically significant figure, but it is also an area where we have seen a certain amount of support and resistance in the past as well. The fact that the British pound pulled back a bit from there isn’t a huge surprise, but it also sets up an interesting trade if we do in fact see a continued reaction to this level.
GBP/USD Video 13.02.20
If the market was to break above the 1.30 level on a daily close, then it’s very likely that the British pound goes looking towards 1.32 level after that. Otherwise, if the market pulls back from the 1.30 level it’s likely that we reach towards the 1.29 level underneath and possibly even further if there is more of a “risk off” type of situation. Pay attention to the general risk equation when it comes to the stock markets and the like, but also you should pay attention to the negotiations and comments coming out of both the European Union and the United Kingdom. Ultimately, this pair will be thought of as undervalued, but as long as there are concerns around the world when it comes to growth, and of course all things that are not American, then the British pound will face some headwinds. On a daily close above the 1.30 level though, I will not hesitate start buying as it would show a shift in attitude.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
More From FXEMPIRE:
- Oil Price Forecast – Oil Looks to be Getting Closer to Establishing a Bottom
- USD/CNY Price Forecast – Lowest Volatility Day for the USD/CNY in Two Weeks
- Silver Price Forecast – Silver Looking To Test Trendline
- Gold Daily News: Wednesday, February 12
- Is Yesterday’s USDX Decline About to Trigger PMs Rally?
- EUR/USD Price Forecast – Euro Initially Tries To Rally But Then Fails Again