The British pound initially tried to rally during the week, but then broke down through the 1.30 level, and then broke down below the 1.28 level. Because of this, the market is going to break down significantly and reach down towards the 1.25 level underneath. This is a large negative candle stick for the week, as we have made a fresh low. The British pound is going to continue to struggle with the idea of Theresa May leaving, which is interesting to me considering she has been a major problem with the Brexit. At the end of the day, there are a lot of concerns as to whether the next PM could be, and what that means for the Brexit going forward. I think at this point though we are getting to the point where we are eventually going to see an oversold condition that eventually will get turned around.
GBP/USD Video 20.05.19
Another thing that is driving this pair is that the US dollar has been strengthening overall, as treasuries continue to attract a lot of money. That obviously requires US dollars, and therefore it’s not a huge surprise to see the strength in the greenback. Overall, this is a market that is getting a bit extended but you’re going to need to be patient enough to wait for some type of supportive daily candle stick to try to turn things around. The 1.25 level being broken to the downside would be extraordinarily negative and could send this market much lower. If we can get above the 1.30 level, then we could go as high as 1.34.
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This article was originally posted on FX Empire
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