Pound Sterling consolidates – time to initiate/add long?

The Brexit process is about to get more intense in the next two weeks. While the Irish Backstop is still being debated across the channel, Parliament will vote on March 12 (again) on PM’s deal. If this deal fails, a series of subsequent votes will determine the fate of Brexit.

As such, after a period of strength, traders have decided to scale back of their GBP long positions. This created a pullback on most GBP pairs.

Versus the USD, the rate is now resting at the prior ceiling at 1.320. From a pure technical perspective, such pullbacks open up good opportunities to put on long positions because of better entry levels. And the rally is no longer overbought.

Against the EUR, a similar technical picture is seen. Prices broke the 1.160 major range resistance, consolidated, and is now attempting a bounce off this resistance-turned-support level (see below).

Of course, a further pullback is not to be discounted, especially if the gov/Parliament lose control of the Brexit process. Therefore, some selective long positions may be opened/added up on further pullbacks. Stops are highly recommended.

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