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Christopher Lewis
GBP/USD

The British pound has initially pulled back a bit during the week but found enough support underneath the turn around and slam into the 200 week EMA yet again. The previous week formed a shooting star which should have kicked off some selling, but we have not seen that. In fact, if we can break above the shooting star it would be a very bullish sign to say the least and could send this market much higher. I do believe this happens eventually, but at the very least we probably have some sideways action ahead of us. Nonetheless, this is a market that will eventually go higher due to the fact that the Federal Reserve continues to work against the value of the greenback.

GBP/USD Video 17.08.20

As long as that continues to be the case, and the greenback is soft, the British pound will gain by default. A break down below the 1.30 level is not necessarily a selling signal though, it just means that we will be looking towards the 1.2750 level for buying opportunities. That is an area that should be well supported, it would make sense to pull back there to retest the previous break out. If that happens, I anticipate that a lot of value hunting will be done in that general vicinity as the 50 week EMA sits in that area. Nonetheless, I do not have any interest in selling this pair, at least not until something changes fundamentally when it comes to the Federal Reserve and its policies. With this, I continue to look for opportunities to pick up the British pound.

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

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