GBP/USD Price Forecast – British Pound Breaks 200 Day EMA

The British pound has rallied significantly during the trading session on Friday, as the British pound simply seems to be unable to pull back. However, gravity has to come back into play sooner or later. When you get a parabolic move like we have had, there are only two end results. The first one of course is that the market simply grind sideways, in order to digest the gains and allow for people to get involved in a much more comfortable way. The alternative is that the market turned around and breaks down. One of these two things has to happen, because eventually gravity comes into play.

GBP/USD Video 08.06.20

It will be interesting to see how this plays out, but if we break down below the 1.25 handle, that could kill the uptrend. All things being equal though, I think that this is a market that is still reacting purely on emotion so therefore you need to be cautious with your position size. A pullback is necessary, if for no other reason than to make it palatable to buying British pounds.

The British pound still represents an economy that has to deal with Brexit, which is being completely ignored right now, but should be noted that a deal needs to happen by the end of the month otherwise it is very likely that the United Kingdom crashes out of the EU. If that is the case, that is not going to be good for the UK economy, at least in the short term. Because of this, this pair continues to give traders headaches.

For a look at all of today’s economic events, check out our economic calendar.