GBP/USD Price Forecast – British pound bounces slightly

The British pound rallied a bit to kick off the week on Monday, reaching towards the 1.3050 handle. That doesn’t mean that we are going to go straight up in the air, but we are trying to defend the 1.30 level. At this point, if we break down below the most recent lows highlighted by the yellow box, then we will probably fall towards the 1.28 level to “reset” when it comes to the upside. That being said, the British pound has been extraordinarily resilient considering everything that’s going on with the Brexit drama.

GBP/USD Video 09.04.19

To the upside, I see a lot of noise right around the 1.32 handle, which is essentially “fair value” in the consolidation area that we have been in. If we can break above there it opens the door to the 1.3350 level, which is the top. A break above there opens the door to the 1.35 level which of course is a large, round, psychologically significant figure.

Recently, we have broken above a downtrend line, and have since gone back and forth after chopping higher. This tells me that the market truly wants to go higher but it needs the necessary catalyst. We have the Federal Reserve on one side of the trade looking to stay very soft and loose with its monetary policy, so that will work against the greenback. Quite frankly, the markets have priced in Armageddon for the United Kingdom, so the British pound is historically cheap. I suppose longer-term traders are looking for value on these dips.

Please let us know what you think in the comments below