The Expectations For A GBP Drop Remain Valid

Despite the expectations that the GBP/USD pair would drop, it continued rising with no significant correction and rallied for about 500 pips.

From a technical analysis point of view, however, the 126.00 level is a strong resistance both on the daily and the weekly time frames.

And since this is a currency pair that could be considered “illogical”, which in recent months strongly depends on politics, we cannot overlook the fact that that the expectations for a drop grow due to the fundamental conditions too – it has been confirmed that tomorrow, 29th March, the British Prime Minister Theresa May will trigger Article 50 for the UK to leave the EU. Under such circumstances it would be illogical to believe that the GBP will continue rising. I think we could rather expect a move to the downside.

So in my opinion, for the moment the expectations for a GBP drop remain valid.