The British pound initially tried to rally during trading on Wednesday but gave back those gains to flatten out quite a bit. At this point the British pound continues to show signs of weakness, but we are still well within the tolerance of the overall consolidation range. If that’s going to continue to be the case, it’s very likely that we are going to see a lot of back-and-forth. If we can break down below the 1.30 range on a daily close, that could unwind this market to go looking for support closer to the 100% Fibonacci retracement level which is substantively the 1.28 handle.
GBP/USD Video 18.04.19
On the other side of the equation we could bounce from the 1.30 level yet again, but at this point we desperately need to see a “higher high” to feel comfortable trying to hang onto the top of the larger consolidation area which reaches all the way to the 1.3350 level. In the meantime, I suspect that the market will continue to be relatively quiet as we got a bit of an extension on the Brexit and now it’s very likely that the headlines don’t favor much volatility at all.
Longer-term I do favor the British pound as I think they will eventually solve the situation for something to work out, but obviously right now we don’t have that catalyst to get aggressive in one direction or the other. I do like buying dips, so quite frankly I would love to buy this closer to the 1.28 handle.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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