The British pound has pulled back a bit during the trading session on Thursday, reaching towards the 1.2950 level which is an area that has seen a lot of support and resistance attached to it. Ultimately, the market is likely to see a bit of support at this juncture, and therefore I do like the idea of buying on these dips as most of the reaction in a negative sense has been due to the European Union threatening to rewrite MiFID regulations to punish the City of London. Ultimately, this is a negotiating tactic and quite frankly the United Kingdom has the upper hand, despite what some bankers may tell you.
GBP/USD Video 07.02.20
The United Kingdom will almost certainly have a bit of an easier path looking at the United States for a free trade agreement, and therefore they have the ability to play a bit more hardball than previously. The Europeans will certainly need to come to some type of terms with the British and given enough time they will start to see the light, and perhaps give Great Britain an opportunity to finally move through this never-ending process. Keep in mind that the market also has a huge sensitivity to risk appetite in general, so it’s likely that the market will move up and down with stock markets and risk appetite in general. So, having said that we need a bit of good news when it comes to global growth and perhaps even the coronavirus in order to see the Japanese yen continue to get sold off.