The British pound rallied a bit early during the day on Wednesday, pulled back towards the previous resistance barrier at the 1.3125 handle, and then bounced enough to send the market higher again. It looks as if we will continue to see a lot of volatility, but quite frankly the one thing that you can’t deny is that every time the British pound breaks down, normally based upon some type of Brexit headlines, the buyers come back and pick it back up. I think that continues to be the way forward, so therefore I am a buyer of the dips.
I think the 1.30 level underneath is even more supportive, so I feel it’s only a matter of time before we continue to see buyers enter the fray. I am essentially “long only” when it comes to the British pound right now as it is historically cheap and of course things are starting to calm down overall. Once we get some type of resolution to the Brexit situation, even if it’s a no deal, I think the certainty will bring buyers back into the marketplace for a longer-term move. I believe that the “smart money” is already starting to front run that event, buying the British pound every time it falls. I plan on following them, and I fully expect that by this time next year, we will be at much higher levels, which quite frankly would just be closer to historical norms.
GBP/USD Video 11.10.18
This article was originally posted on FX Empire
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