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Christopher Lewis

The British pound has pulled back a bit during the trading session on Thursday, only to find support at the 50 day EMA. Because of this, it looks as if we are continuing to grind sideways in an overall effort to build up the necessary momentum to break above resistance that starts at the 1.2650 level, extending to the 1.2750 level. If and when we can break above this resistance, the market should go looking towards the 1.30 level.

That being said, there is not much of a catalyst to get the markets moving quickly. Beyond that, the Bank of England and the Federal Reserve are both rather loose with monetary policy and therefore monetary policy has been taken out of the equation. This will come down to coronavirus figures and the reactionary efforts of the respective countries. Ultimately, the British pound probably does rise a bit against the US dollar, but I think this is essentially a fight between two soft currencies.

GBP/USD Video 17.07.20

With that in mind, I think that the US dollar is going to get hit rather hard going forward, but in the meantime as long as people are still concerned there is still a little bit of a “safety bid” for the greenback. That will keep this choppy and range bound but ultimately, I do think the market continues to go higher. This will be especially true if we continue to see a lot of “risk on” trading. Expect choppy and volatile markets, but I think that buying the dips probably continues to be the best way to approach this market from a short-term perspective.

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