The Downwards GBP/USD Trend Appears Exhausted

The huge crash of the UK currency seems over, at least for now. The move to the downside appears exhausted after the pair reached a historical low at 1.2788, but the political climate in the UK is such that investors still seem skittish to buy British pounds.

When there is such a huge drop it’s natural for a corrective move to the upside to begin, but in this case this is not happening. This is one of those rare cases that we see lately, when the fundamentals are completely in control of the currency pairs. GBP/USD is forming a tight range between 1.2850 and 1.3050 in a sideways consolidation, and on the daily time frame are forming bars that are showing that investors and traders are hesitating.

It is clear that everyone are expecting a news event to give the pair a push, regardless of its direction – be it to the downside, or finally to the upside. This news event should come from the British government which has to make the decision whether to invoke Article 50 of Treaty of the European Union or not.

All we can do is wait for that final decision before we decide to open long positions. Until then we can only trade on the smaller time frames.