GBP/USD Price Forecast – British Pound Pulls Back to Kickoff Week

The British pound broke down significantly during the trading session on Monday to kick off the week on its back foot, reaching towards 1.24 level. This is an area that will attract a certain amount of attention, but quite frankly I do not think it is enough to support the market by itself. We would need some type of US dollar weakness to turn things around, and although it is not impossible, the reality is that the British pound suffers quite a bit when it comes to the idea of what happens next in the United Kingdom. After all, the United Kingdom will be extraordinarily weak due to the fact that it will be locked down for a much longer time than the United States which is already starting to open.

GBP/USD Video 05.05.20

Furthermore, the economic numbers coming out of the United Kingdom were really poor, all at the same time the United States is already starting to see parts of the country open up. With that being the case, I like the idea of shorting this market, especially as the most recent high failed to make a “higher high.” In other words, we are starting to run out of momentum. That does not mean that it is going to be a sudden break down here, but the reality is that we will be very unlikely to rally for a longer-term move, so I would be overly cautious when it comes to trying to buy this currency pair.