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GBP/USD Price Forecast – British Pound Continues To Find Buyers On Dips

By:
Christopher Lewis
Updated: Oct 21, 2019, 15:54 UTC

British pound fell initially during the open on Monday but has found buyers on this dip to turn around and show signs of life. Ultimately, the British pound is overbought though so it’s difficult to buy at these elevated levels.

GBP/USD daily chart, October 22, 2019

The British pound has gone back and forth during the trading session on Monday, initially dipping lower but finding enough support underneath to continue to grind this market higher. Ultimately the British pound does look as if it is trying to change the longer-term trend but chasing it after 800 pips gain in two weeks is foolhardy. Ultimately, the 200-day EMA underneath could cause quite a bit of support, and therefore I think it would be interesting to see a retest of that level as it will attract a lot of attention. A breakdown below that level, which is currently at the 1.27 region, opens the door to the 1.25 had aware me even more interested in buying the Pound.

GBP/USD Video 22.10.19

Keep in mind that Brexit noise continues to be out of control and is very likely that headlines will throw this market around. However, the one thing that seems to be a driving force is that there is a belief that the situation is getting a bit better, and with that being the case, there’s obviously going to be quite a bit of buying pressure given enough time. After all, the British pound is historically cheap at the moment, so a rebalance of value needs to come back into play. Short-term pullbacks should continue to offer value the people were willing to take advantage of, as it appears that the worst-case scenario for Brexit is not going to be realized. Because of this, buying on the dips is the only thing you can do.

Please let us know what you think in the comments below

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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