GBP/USD Price Forecast – British pound drops heading towards FedThe British pound broke down a little bit during the trading session on Wednesday as we are waiting for the Federal Reserve to give an interest rate hike, and a statement. The statement will be parsed by traders around the world, determining whether or not the Federal Reserve will be more hawkish or dovish in the future.
The British pound continues to show resistance above at the 1.27 handle, and quite frankly it would not surprise me at all to see a run back towards that level, only to see sellers step back in and punish the British pound. Quite frankly, as soon as we get past the statement by the Federal Reserve, it’s likely that we will see traders focus on the Brexit again, which of course is the biggest part of this pair right now. The 1.27 level was massive support, and it should now be massive resistance. I think the first signs of failure are an opportunity to start shorting again.
GBP/USD Video 20.12.18
Based upon the descending triangle, the market should structurally go down to the 1.22 handle, but that doesn’t mean that it will happen overnight. Quite frankly, we will need a couple of shocks via the headlines, and quite frankly that’s only a matter of time I think. At this point, it’s very likely that sellers will come back into this market as soon as there is a sign of trouble in the United Kingdom. I don’t think we’re anywhere near the bottom of the market right now, not to mention that we are nowhere near a resolution to the Brexit. I think as we head into the new year, the British pound will continue to be sold going forward. It’s not until we break above the 1.28 level that I would consider the possibility of a trend change, and even then I would be very cautious.