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Christopher Lewis
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The British pound rallied a bit during the course of the trading session on Thursday but then turned around as the Bank of England came out with an extremely accommodative policy stands. While this was not necessarily a surprise, the reality is that the market has quite a bit of noise surrounding it based upon the Federal Reserve as well. With that in mind, I believe that the 1.37 level underneath is going to be support, while the 1.42 level above offers resistance. That makes the 1.40 level essentially “fair value”, which of course is a large, round, psychologically significant figure that a lot of people will be paying attention to. Beyond that, we also have the 50 day EMA hanging around the same area.

GBP/USD Video 25.06.21

When I look at this chart, I anticipate that we are probably going to continue in a relatively well defined range, and it is also possible that the rest of the summer looks at these levels as the boundaries for the market in general. That being said, the market is likely to continue seeing a lot of support underneath at the 1.37 level, not only due to the fact that it has been supportive, but we also have the 200 day EMA racing towards that level. When you look at the 1.42 level, you can see from a historical standpoint it has been important for quite some time, and it does make sense that we would have to struggle greatly to get above there. At this point, I think it is a lot of back-and-forth trading just waiting to happen over the next couple of months.

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