The British pound initially tried to rally a bit during the session on Friday, but then gave back the gains to show signs of weakness again. Quite frankly, the British pound breaking down below the bottom of the hammer from the previous session suggests that we are going to continue to see a lot of pressure. The US dollar of course will continue to offer a safe haven from Europe, and the United Kingdom. That being said, there is a lot of hope out there that everything will go back to normal, so do not expect some type of massive break down to happen all at once.
GBP/USD Video 25.05.20
Risk is a funny thing. It is building up over time and very subtle, but eventually the floodgates open. I feel this is what is going to happen over here as well, and therefore one day we will see a massive candlestick that implies that we are getting ready to go lower. I have no interest in buying this pair, at least not until we see some type of major change in the world’s attitude and a move above the 50 day EMA. Simply fading rallies continues to work in the British pound, although you will need to be somewhat patient as the resiliency is something to behold. The 1.20 level is my target longer-term, but as we head into the Memorial Day weekend, it is likely that the liquidity issues may keep this thing somewhat quiet for the next several sessions.