The British pound has rallied a bit during the trading session on Monday, breaking above the top of the inverted hammer from the previous session.
Ultimately though, this is a market that is going to be greatly influenced by noise coming out of the United Kingdom itself. The British government is going to be voting on the legality of certain moves in the Brexit negotiations, as there are concerns that part of Boris Johnson’s plan is not legal from an international law standard. At the same time, the Europeans are starting to threaten lawsuits, so it looks like Brexit is starting to kick up into high gear again when it comes to anxieties. It is under this microscope that I am a bit suspicious of any rally at this point, but the technical analysis does suggest that buyers are starting to step in.
GBP/USD Video 15.09.20
Just below, the 200 day EMA offers support at the 1.2750 level, an area that keeps popping up in my analysis. Because of this, the fact that we have bounced from there certainly has caught my attention again, and therefore we could try to reach towards the 1.30 level above given enough time. However, if we were to turn around a break down below the 200 day EMA we could see the market drop towards the 1.25 level.
That is an area that I think would also be supportive, but I think the one thing that you can probably take away from the entire situation is that we will continue to see a lot of choppy behavior so the very most important thing that you should keep in the back your mind is keeping your risk low. This means smaller trading positions as headlines will cross the wires to throw this market back and forth again.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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