GBP/USD Price Forecast – British pound continues to roll over

The British pound continues to rollover overall, as the Brexit of course weighs upon the currency. Beyond that, we have recently tested major resistance, so it makes sense that we start to drift a bit lower.
Christopher Lewis
GBP/USD daily chart, December 28, 2018

The British pound tested the 1.27 level over the last couple of days and has rolled over since then. Overall, I think that the market goes down to the 1.26 level, perhaps the 1.25 level after that. The 50 day EMA is just above the major resistance barrier at the 1.27 level, offering it even more resistance. I think that the longer-term downtrend is very much intact, and therefore the 200 day moving average above is drifting a bit lower, suggesting that we are starting to pick up momentum again. Remember, the Brexit is a long way away from being settled, so therefore it’s very likely that the British pound will be something that we want to sell.

GBP/USD Video 28.12.18

When I look at the overall structure of the market, we have recently formed a descending triangle that measures for a move down to the 1.22 handle, and although we have been a bit resilient over the last several days, it’s likely that we do start to reach towards that target once liquidity picked up after the holidays. Remember, the Brexit is sent to happen at the end of March, so we will need to get something done between now and then. If we don’t, then it becomes a “hard Brexit”, and that of course would be especially disruptive to the British economy. Beyond that, the Euro would probably get hammered as well. Until we get some type of agreement, the hard Brexit is a very real threat that traders will be paying attention to.

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