The British pound has rallied significantly during the course of the week but has still yet to break above the 1.25 handle. With that being the case, it is likely that we are going to see a lot of struggling to break out, but at the same time it certainly looks as if there is a ton of support underneath as well. Quite frankly, it would not surprise me at all to see this upcoming week show more of the same, simple chopping around between 1.22 on the bottom and 1.25 on the top. The 50 week EMA is sitting at roughly 1.26 and turning lower, so we are most certainly at an area that could cause a bit of selling pressure.
GBP/USD Video 06.07.20
Do not forget that the US dollar is being crushed by the Federal Reserve, but at the same time the Bank of England has recently just walked away from the idea of negative interest rates. In other words, the Bank of England is going to be extraordinarily loose with its monetary policy so there is no reason to think that the market will not continue to punish both of these currencies, and that is probably part of the problem here: both of these currencies are being shown for other assets such as gold. That being said, we are still very much in a longer term downtrend, and the moving averages do suggest that we will see a return to that. If we break above the 50 week EMA, then we could go looking towards the 1.30 level, but at this point I am not expecting that in the near term.
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This article was originally posted on FX Empire
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