The British pound initially pulled back a bit during the week but turned around to show signs of strength again going into the election. Once the conservatives actually won a majority and Parliament, we saw a spike higher and towards the 1.35 handle, before rolling over again and showing a bit of a give back in. Because of this, it looks as if we probably have a continued uptrend trying to build itself, but now we have real work to do.
GBP/USD Video 16.12.19
If the market was to break above the 1.35 handle, then it’s an obvious bullish signal and should send this market towards the 1.38 level. The 1.38 level is a target based upon the bullish flag underneath, and of course has not been hit yet. Ultimately, if we pull back towards the 1.30 level then I think there are plenty of buyers in that general vicinity as well. The neck support level is the 1.28 handle. At this point in time though, it looks as if Brexit will actually happen in our lifetime, which just the certainty of that could be very bullish for the British pound. Expect a lot of volatility but I like the idea of looking at pullbacks as potential value to be taken advantage of. I have no interest in shorting this pair, unless of course something catastrophic happens but at this point that seems to be a bit unlikely. Ultimately, this is a market that I think will start to look at the current trading levels as “historically cheap”, and therefore value hunters will continue to flock to this pair.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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