The British pound initially tried to rally during the trading session on Thursday but continues to see a lot of softness. As we continue to see sellers jump in every time we try to make an attempt to rally, it should be obvious that we have major issues going forward.
Looking atthe British pound, it should be obvious at this point that we simply can’t get out of our own way. Because of this, I believe that it is only a matter of time before we break down and reach towards the 1.20 level. However, that doesn’t mean we have to do it right this second. I believe that we will continue to see a lot of noise, and therefore a lot of choppiness. I prefer to sell rallies as they occur, especially if we can reach as high as the 1.2350 level, although I don’t anticipate that the happen anytime soon. If we do get that move though, I will not hesitate to start selling at the first signs of trouble. Ultimately, this is a market that I think will continue to struggle under the weight of the nonsense that’s going on around the Brexit, as there is no end in sight.
GBP/USD Video 08.08.19
Beyond that, the US dollar continues to be a bit of a “safety currency”, so I find it difficult to imagine a scenario where they are going to suddenly throw that away in favor of a currency that struggles at the hands of such uncertainty. The 1.20 level will of course be massive support and psychological importance to the market, but I do believe we eventually break down below there and go looking towards the 1.15 handle underneath. All things being equal I think you can continue to fade rallies.
Please let us know what you think in the comments below