Despite the potential for a pullback, the British pound continues to exhibit volatility and upward momentum.
- The GBP/USD displayed a cautious stance during Monday’s trading session, indicating a need for consolidation after a recent period of overextension.
- The market has experienced a breakout, and it is highly probable that a pullback will occur as buyers search for support levels.
- The 1.2650 region is an area where the market could find support based on previous resistance encountered.
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Despite the potential for a pullback, the British pound continues to exhibit volatility and upward momentum. However, with the passage of time, a corrective phase will likely be necessary to attract additional buyers. It is worth noting that trading conditions may not be typical due to the closure of the United States markets for the Juneteenth holiday. While the 1.2650 level should provide support, the 50-Day Exponential Moving Average could also come into play if a breakdown occurs.
Should the market reverse and surpass Friday’s candlestick high, it is possible that a move toward the 1.30 level will ensue. This level holds psychological significance due to its round-figure nature and has recently emerged as a target. Overall, the British pound appears poised for upward pressure in the long run, but short-term charts suggest a notable degree of volatility. Currently, there is little incentive to initiate short positions unless there is a fundamental shift in the broader economic landscape. It is acknowledged that the global economy may encounter sluggishness, leading to the US dollar attracting attention during times of economic uncertainty.
Given the current circumstances, shorting the pound seems unwise, and the market is likely to draw the attention of value hunters seeking supportive price action. Only a breach below the 200-Day EMA, closer to the 1.2350 area, would spark interest in shorting the currency. Until then, it is anticipated that buyers will enter the market as it exhibits signs of support. It is crucial to remain cautious and responsive to changing market dynamics.
In the end, the British pound demonstrates cautious behavior, indicating a potential pullback after recent overextension. A breakout has occurred, prompting the search for support levels. The 1.2650 regions are anticipated to provide a foundation based on past resistance levels. While volatility and upward momentum persist, the market will likely require a corrective phase to attract more buyers. The closure of US markets for the Juneteenth holiday may influence trading conditions. Potential scenarios include a move towards the 1.30 level if Friday’s candlestick high is surpassed. Shorting the pound holds limited appeal in the absence of significant shifts in the economic landscape. The focus remains on value hunting and identifying supportive price action. Only a breach below the 200-Day EMA would generate interest in short positions. As market conditions evolve, a cautious and adaptable approach is vital.
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