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Christopher Lewis
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GBP/USD

The British pound has rallied significantly against the US dollar this week, breaking above the small double top that had been formed at the 1.2650 region. Now that the market has broken above there, it is likely that we could go looking towards 1.2750 level above. That is an area that had previously been important, so it will be interesting to see how this plays out next. The British pound being overextended is rather interesting, considering that we have to worry about the Brexit coming soon. The Brexit looks like a hard crash just waiting to happen and if that is what happens, it will more than likely cause quite a bit of painful economic contraction in the UK.

GBP/USD Video 08.06.20

Having said that, there is an important area at 1.2750 which has shown itself to be reactive more than once so it will be interesting to see whether or not we can simply slice through there. At this point I think a pullback makes quite a bit of sense, although shorting clearly cannot be done at this point. With that in mind, I like the idea of waiting on pullbacks in order to try to pick up the British pound, but longer-term I have to question whether or not this is going to continue to be something that can simply take off to the upside. Having said that, a move above the 1.2750 level opens up the possibility of the 1.30 level next. To the downside, if we were to break down below the 1.25 handle, then that would change everything.

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

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