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The pound is ready to dive once again

GBPUSD Tech analysis by Simon Kazinsky on 09:52 November 06, 2017 EST

The pound remains weak against most of its major counterparts and certainly versus both the US dollar and the Euro.

However, for the past few months the British currency has been able to hold against the dollar and correct about 10 cents from its multi decade low at 1.20.

Currently trading just above 1.30 GBPUSD remains subject to the medium and long term trends for both the pound and the US dollar. The pound is still a weak currency when comparing against a basket of currencies. Unable to find a clear way forward on the Brexit front, balance its budget and its trade deficit the UK's currency is still being sold even though last week the Bank of England raised its key interest rate after keeping it at a historic low at 0.25% for a decade.

On the opposite side of the trade, the US dollar appears to be resuming its upward trends against virtually any currency. The possibility of US firms repatriating their offshore funds with a generous tax plan for them may be playing a role on this move.

The combination of a weak pound and a strong dollar favours the continuation of the current trend even at this subdued exchanged. Retail traders are buying the pound and as this is usually a contrarian indication it gives further confidence to this bias.

Breaking the support ascending trendline presently just above 1.30 will send the final signal that it is time to short the pair once again.