The British pound has gone back and forth during the trading session on Wednesday, reaching towards the 50 day EMA before selling off. Interestingly enough, even though the market tried to rally, you can see that it gave back quite a bit of the gains. The market is likely to continue to go looking for support underneath, and I do think that the 200 day EMA will be targeted. The 1.2750 level is an area that has attracted a lot of attention, and therefore I think a lot of people would be very interested in that region. If we break down below it, then the market is likely to go down to the 1.25 handle.
Looking at the candlestick, it does not necessarily instill a lot of confidence, and therefore I do think that we are more likely than not to continue to try to grind lower. I think the keyword of course is going to be “grind”, as I do not expect clean moves in this pair at all. Ultimately, the market is being held hostage by headline rests coming out of Brexit, and of course the potential lockdown in the United Kingdom in general. Because of this, I think that the market will continue to move on the latest rumor or headline, and therefore it is going to be difficult to get your head around at times. However, if the market breaks above the 1.3050 level on a daily close, then it would be a clear sign that we are starting to see a lot of bullish pressure and could be buyers for a bigger move. #GBP/USD##FX#
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