GBP/USD Price Forecast – British pound breaks vital 1.30 level

The British pound broke down early during the Tuesday trading session, showing signs of further deterioration. However, every time we see one of these major breakdowns, the British pound turns around to show its resiliency again. I do think that happens eventually but breaking below the vital 1.30 level is certainly something that will have caught the attention of the longer-term traders. I think at this point, you are probably best sitting on the sidelines and waiting for the market to recapture the 1.30 level, and perhaps the previous downtrend line that should have acted as support again.

I recognize that the interest rate differential most certainly will favor the United States, but quite frankly the British pound has been extraordinarily resilient in the face of bad news, and it seems as if every time we selloff there are plenty of value hunters willing to jump into the pound and pick it up as it is historically cheap. I believe that the 1.2750 level below is the next major support area, so if we do not recapture the 1.30 level in the short term, that’s probably where we will end up heading. Ultimately, this is a currency that is going to continue to be very noisy, at least for the foreseeable future. However, I maintain that eventually the buyers will win as there has been so much negativity there aren’t that many people left to sell. These types of moves for the longer-term typically will shake out a lot of “weak hands.”

GBP/USD Video 03.10.18