The British pound has rallied a bit during the week, reaching towards the 200 week EMA and breaking above the 1.30 level. The 1.30 level of course is an area that attracts a lot of attention, but we have sliced through the couple of different times recently, so it does wear down some of its importance. Furthermore, the 200 week EMA has also been the sliced through a couple of times, so the same can be said for it.
GBP/USD Video 17.02.20
The British pound will continue to be very noisy based upon the fact that there are no clear signs of directionality in the short term, but the longer-term certainly seems to favor the British pound, mainly because Great Britain it has come together when it comes to the Brexit. Ultimately, this is a market that will eventually more than likely go breaking towards the 1.35 level again, and I think at this point short-term pullback should continue to find plenty of support at the 50 week EMA. All things being equal, that is also the 50% Fibonacci retracement level will more than likely come into play as well.
At this point, Great Britain is in a much better place that was just a couple of years ago, and then of course makes the British pound very undervalued. From historical perspective, a lot of value hunters will be attracted to this market. Beyond that, if the market does pull back, there are plenty of buyers waiting underneath that both the 50 week EMA and the 1.25 handle. I have no interest in shorting the British pound, but I do recognize that it may not be the easiest thing to hang onto in the short term.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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