The Friday session was initially somewhat negative for the British pound, but we did get a little bit of a burst of positivity as it was announced that the French were possibly working on some type of compromise for the fishing spats that currently slows down Brexit talks. Ultimately, the market is likely to go looking towards the 50 day EMA and the 200 day EMA as they flatten out. In other words, we are most decidedly consolidating at the moment, and that will probably continue to distort what happens in this pair. After all, when both the 50 and the 200 day EMA are relatively flat, that means that both the short and the long term trend has died off.
GBP/JPY Video 26.10.20
This makes perfect sense though, because there are so many risks out there that the Japanese yen has gotten a bit of a bid. Furthermore, Brexit continues to cause major issues with the British pound, so it is difficult to get overly aggressive with anything involving the British pound until that gets solved. I have this suspicion that as soon as Brexit is solved though, the British pound is going to be THE currency to start buying against almost everything. After all, it has had the specter of Brexit hanging over his head for so long that I think a simple relief rally could be along the magnitude of 10 handles or more. With that being the case, I most certainly am paying attention but am very cautious about putting money to work right away. I prefer to buy dips.
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This article was originally posted on FX Empire