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Christopher Lewis

The British pound went back and forth during the trading session on Tuesday, and as a Great Britain continues to fight the effects of withdrawing from the European Union. Ultimately though, this is a pair that is also featuring the greenback, which is one of the strongest currencies in the world. Quite frankly, the United States is the only place where you see a significant amount of growth, so it makes quite a bit of sense that the greenback continues to strengthen overall. Ultimately, the British pound is fully undervalued at this point, so I do think that eventually it rallies.

GBP/USD Video 19.02.20

If we can break above the 50 day EMA, then it’s likely that the market goes looking towards the 1.32 handle. The 1.32 level being broken to the upside than opens up the door to the 1.35 handle given enough time. Ultimately, this is a market that will be a longer-term “buy-and-hold” situation but we aren’t quite ready to give up on the volatility. I think that short-term pullbacks offer an opportunity to pick up a little bit of value and build a larger core position, but if we were to break down below the 1.28 level, then it gets very ugly.

To the upside, I believe the 1.35 handle is the longer-term target and eventually we probably break above there. If we can break that, it’s likely that we then continue more of a “buy-and-hold” scenario. Overall, this is a market that looks as if it is trying to pick itself up off the floor, but there is a lot of work to do so patience will be needed.

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