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Christopher Lewis

The British pound initially fell during the trading session on Wednesday but turned around to show signs of life again as Boris Johnson signaled that the United Kingdom would continue to negotiate beyond the made up October 15 deal deadline. At this point, more hope enters the marketplace, but at this point if Brexit cannot be solved in several years, it is difficult to imagine that the market is suddenly going to get good news between now and the end of the year. I think at this point it is likely that the British pound will continue to sell off occasionally, and therefore it is likely that the British pound has gotten ahead of itself with this reaction.

GBP/JPY Video 15.10.20

Looking at this chart, we have recently seen a major breakdown, but we also have a significant amount of support near the ¥135 level. Because of this, I think we continue to go back and forth with a lot of uncertainty. It is very difficult to imagine a scenario where we get cleared anytime soon, so this will continue to move on headlines just as we have previously. Yesterday, I mentioned that there was a lot of support underneath, and it looks like it has come back into the fray.

That being said, I do not think that we go straight up in the air without some type of really good news, and therefore the sideways chop is very likely to continue to be the mainstay of this market. Quite frankly, I would avoid trading the British pound altogether but if you are going to get involved, I would use very tiny positions.

For a look at all of today’s economic events, check out our economic calendar.

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