GBP/USD Forecast: GBP Slamming into Resistance

The British pound has initially fallen during the trading session on Tuesday to break down below support but then ended up turning around to show signs of strength again as the market slammed into the 1.26 level. This shows just how volatile the markets are at the moment, and now it looks as if we are going to continue to see a lot of back-and-forth.

Keep in mind that the British pound has fared better against the greenback overall, therefore it’s likely that we will see the British pound do better than some of the other currencies such as the Euro which is struggling. All things being equal, this is a market that is still negative, but it is doing quite a bit to save itself. At this point, I think we will continue to see a lot of nasty moves, and I think it’ll be difficult to deal with the momentum that gets thrown back and forth in this market, and therefore you need to be very cautious with your position size.

We are still very much in a downtrend, and I certainly think that the momentum that has been thrown into this market will be difficult to maintain after the return, but if we were to break above the 1.2650 level, and then the 50 Day EMA, we could see the British pound takeoff against the US dollar and make a move to the 1.30 handle. That’s an area where I would expect to see a lot of selling pressure as well, as it had previously been so much support. The market shows it as an important level multiple times in the past, and I do not expect that to be any different if we were to approach it again. At that point, if we can break above there then I would believe that the downtrend is over.

If we break down below the bottom of the candlestick for the trading session on Tuesday, then it opens up the possibility of a move down to the 1.24 level, followed by the 1.22 level, where we had bounced from, to begin with. I don’t know that we break through there, but if we do it opens up the possibility of a move down to the 1.20 level. Regardless, I am still fading short-term rallies as things stand at the moment.


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