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Christopher Lewis

The British pound has pulled back a bit during the trading session on Thursday as the 1.33 level has caused a significant amount of resistance. Ultimately, this is a market that is dealing with a lot of resistance in this area and it has formed a “micro double top” over the last week and a half. At this point in time, I would anticipate a little bit of a pullback but as we have seen more than once, the British pound seems to have buyers every time it dips. At this point time, the market is probably one you need to be looking at in a “buy on the dips” type of mentality.

GBP/USD Video 20.11.20

Looking at this chart, if we do break above the 1.33 handle then it opens up the possibility of a move towards the 1.35 handle above which is where we had seen a major pull back. To the downside, the 1.30 level underneath should be significant support, not only due to the fact that it is a large, round, psychologically significant figure but it is also the 50 day EMA sitting just above it so I think a lot of technical traders will be paying attention to that.

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Ultimately, this is a market that I think continues to see a lot of interest underneath but given enough time I think we will continue to go higher due to the fact that the British pound is roughly 15% undervalued according to historical norms. Ultimately, this is a market that I have no interest in selling, because quite frankly I have been burned more than once trying to do it.

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

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