GBP/USD Price Forecast – British pound choppy and sideways on WednesdayThe British pound continues to hover around the 1.30 level on Wednesday, as we are sitting just below a major downtrend line. This downtrend line should be relatively important, but we did break above it briefly already.
The British pound went back and forth during the day on Wednesday, dancing around the 1.30 level again. That’s an area that of course will attract a lot of attention as it is a large, round, psychologically significant number, but beyond that we have a downtrend line just above that was broken through at one point, until conflicting words from EU ministers about the Brexit negotiations came out. That of course since the markets into a tizzy, and we have what you see in front of you. I believe that this market is going to be all about the Brexit, so if you are looking to buy the US dollar based upon a “risk off” trade, you will probably need to do it against other currencies as a lot of the “smart money” has started buying British pounds previously, providing a lot of support for this market.
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Ultimately, this is a market that I think will break out but we need that confirmation of a deal before it happens. Every time we get a whiff of the potential deal being signed, the British pound skyrockets. That shows just how much attention is being paid to the headlines, and I think we will continue to see that be the case as such. Once we do break out, I would not be surprised at all to see the 1.40 level tested much quicker than people expect. Otherwise, if we do break down I think that the 1.29 level will also bring in a lot of buying pressure. Buying on the dips is how I continue to play this market but I’m not expecting much in the short term.