GBP/USD Price Forecast – British pound breaks down as more drama unfolds in London

The British pound continues to look very soft and was six cabinet members resigning in the last 24 hours in reaction to the Brexit deal tells me that we are nowhere near some type of deal, and the idea of a “no deal Brexit” is starting to become even more likely. At this point, the 1.27 level underneath continues offer support, but if we were to break down below there, I believe that the triangle that I have marked on the chart signifies that we will probably go down to the 1.22 handle. Obviously, this can change with the occasional headline, but one thing that seems to be sure about the British pound lately is that anytime there’s a good headline coming out over Twitter, Algo traders will start buying the British pound, only to see it fall again. It’s quite stunning how often these things get tricked, and how people continue to use them.

GBP/USD Video 16.11.18

If we were to break above the top of the downtrend line and the 200 EMA on the daily chart pictured with this article, then that would change a lot. However, I don’t think that’s going to happen anytime soon and it’s very likely that we continue to see rallies sold as this has been one of the easiest trades for some time. Add to that the fact that the Federal Reserve is raising interest rates, you have a perfect storm.