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Christopher Lewis
GBP/USD daily chart, October 25, 2019

The British pound has gone back and forth during the trading session on Thursday, showing signs of unsteady behavior and of course trouble when it comes to where we go next with Brexit. However, at this point the market is obviously overextended, but at this point this is a market that should continue to be choppy to say the least. A pullback would make quite a bit of sense, perhaps down to the 200-day EMA. At this point in time, the market looks likely to need some type of pullback if nothing else just to build up a bit of momentum. All things being equal though, this is a market that will continue to find plenty of reasons to move, not the least of which will be Brexit. We have priced in an avoidance of the worst-case scenario, so at this point the market is waiting to see what happens next.

GBP/USD Video 25.10.19

The 1.25 level underneath should be thought of as the “hard floor” in the market. Ultimately, this is a market that will continue to go higher over the longer term based upon the fact that it is a bit low by historical standards, and as soon as Brexit get settled completely, this is a market that will very likely find plenty of reasons to go much higher and back towards historical norms. This is the longer-term plan, but I would like the idea of picking up a bit of value on a dip. Paying up at this level is a bit too much.

Please let us know what you think in the comments below

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