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British pound breaks down on Wednesday

The FOMC minutes may have eased demand for the Dollar, but with UK retail sales figures, Carney and the ECB’s monetary policy minutes in focus today, it could all swing back in the Dollar’s favor.

The British pound has broken down significantly during the trading session on Wednesday, as we have reached towards the 1.33 level underneath. I think at this point, it’s likely that we will continue to drive lower, as the US dollar of course has rising interest rates behind it, and of course there is a lot of concerns when it comes to the United Kingdom in general as it departs the European Union. I believe that the market will ultimately go looking towards the 1.30 level underneath, but we may bounce a couple of times between now and then. I think that the market will continue to favor the US dollar overall, but we are a little bit oversold, so the bounce may come rather soon.

I believe that rallies at this point should continue to be opportunities to get short of this market, as the bounce would offer “value” in the US dollar. I believe that the market continues to be bearish regardless, as the 1.35 level now continues to be a massive “ceiling” in the market. I think that we will ultimately go to at least the 1.30 level during the summer, but obviously we will have the occasional bounce. Overall, I think that the US dollar is the main driver of this pair, as it is one of the favored currencies around the world.

GBP/USD Video 24.05.18

This article was originally posted on FX Empire

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