GBP/USD Price Forecast – British pound continues to be noisy and negativeThe British pound fell again during trading on Friday, reaching down to the 1.2750 level, an area that I said could be supported based upon longer-term charts. We got there very quickly, so now I think the market is probably going to try to catch his breath.
The British pound continues to get punished for all things Brexit and of course an inability of Conservative Party members in the United Kingdom to get it together and present a united front. People are starting to price in the idea of a “no deal Brexit”, so things are becoming much more negative. Ultimately, I think it’s only a matter of time before we need to bounce, but we will probably break through the 1.2750 level and go looking to the 1.25 level next. Remember, even though there may be no deal, the WTO deals that have been signed by both countries will be the fallback position. In other words, I no deal Brexit is not the end of the world, despite what media may have you believe.
At this point, the trade of the century might be buying the British pound at low levels, but clearly you need a longer-term signal to start doing that. In the meantime, I believe that short-term rallies will continue to show exhaustion that you can short. This is a short-term traders market currently, but if we do eventually get some type of clarity in the Brexit, we may see the beginning of a turnaround longer-term for this pair. Obviously, the US dollar is highly prized right now as a safety asset, not only against the British pound, but against the Euro and several others. This is why I think short-term traders continue to push lower.