The GBP/USD pair went sideways initially on Wednesday, but the Americans started buying the British pound in mass. Now that we are cleanly above the 1.3050 level, if we can stay above there for a daily close, I believe that the market continues to reach towards the 1.32 handle. I believe that the 1.30 level underneath is a bit of a “floor” in the market, so having said that I think that pullbacks should continue to offer buying opportunities. Given enough time, we can break above the 1.32 level, but I believe that short-term trading is probably what we are looking at, with a bit of a positive bias, maybe not due to the British pound so much, but perhaps the declining value the US dollar overall. I expect to see continued volatility, but it certainly seems to be a market that has more of an upward bias going forward.
Buying dips is the best way to go in this market, and I believe that the volatility continues to be a mainstay, but this is because we are looking at 2 very soft currencies overall. Given enough time, I think that we will see the market break out to the upside, as the British pound looks as it has been trying to form a base for some time. There are a lot of concerns when it comes to the United Kingdom leaving the European Union, so that of course will cause a bit of bearish pressure on the British pound, perhaps making it underperform the euro and other currencies. Ultimately, I believe that we are trying to change the overall trend to the upside, but as you to take a lot of work after the absolute shellacking that the British pound received over the last several years.
Written by FX Empire