GBP/USD Price Forecast – British pound breaks higher

The British pound rallied a bit during the trading session on Tuesday, breaking towards 1.23 level by the time the Americans kicked it off. All things been equal though, it looks as if we are still very much in a downtrend so I would not be chasing this trade. In fact, the 50 day EMA is just above and could offer resistance just shortly from here. Beyond that, we also have a lot of resistance at the 1.25 handle, so I think it’s only a matter of time before we get selling pressure again. That being the case, I think that this is more or less a “relief rally.”

GBP/USD Video 28.08.19

The Brexit of course has it been solved and we are getting closer to that October 31 deadline. If the British cannot come up with some deal, I suspect there will be one more major “flush lower” in this market, and then stabilization. That stabilization wind up being one of the great trades of your career if you are looking to buy it, but we are a long way away from seeing that happen. In the meantime, you are looking for exhaustion to start selling again. I am more than willing to step to the sidelines and let this market rally significantly so that I can short this market from a higher level. At this point, the 50 day EMA would be the first area I would look for signs of exhaustion on a short-term chart, then of course the 1.25 level. Simple patience will be needed.

Please let us know what you think in the comments below