The British pound initially pulled back a bit during the trading session on Tuesday, but it’s turned around to rally and reach towards 1.2950 level, which I believe is a bit of resistance extending to the 1.30 level above. If we can clear that level, then the market should then go looking towards the 1.32 level above. The idea of buying short-term pullbacks continues to be a good strategy as we have seen plenty of demand underneath. At this point, I believe that the British pound is in fact going to go much higher.
GBP/USD Video 20.02.19
Looking at the chart, you can see that the downtrend line has offered support, and the 50% Fibonacci retracement has also offered significant support. At this point, it looks as if we are reaching towards the highs given enough time, but I also recognize that there will be a lot of headline risk when it comes to the British pound due to the Brexit. On the other side of the equation we have the Federal Reserve looking very soft, so that continues to put a bit of downward pressure on the greenback overall, lifting this pair as well.
Even if we break down below there, the 1.27 level underneath offers massive support in the form of previous structural significance, and of course the 61.8% Fibonacci retracement level. I do like the idea of the British pound bottoming longer-term, and at this point it looks as if the trend is trying to change which is always a major mess and difficult to trade at times.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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