GBP/USD Price Forecast – British Pound Gives Up Early Gains

The British pound initially shot higher during the trading session on Tuesday but gave back the gains rather quickly. That being said, I do not necessarily think that this changes very much, even though it does show signs of weakness. I think it is simply a matter of the market been a little overextended after the big move on Monday. If we can break above the 1.36 level, which is where we pull back from, then it is very likely that we could go higher, perhaps reaching towards 1.37 level.

GBP/USD Video 10.11.21

The market of course is going to be paying attention to interest rates coming out the United States, which are shrinking. Furthermore, the Bank of England suggested last week that they were not going to taper their bond purchase program, at least not yet. At this point, the market has had time to digest the fact that the announcement was more or less a delay, not a repudiation of doing so. Because of this, I think is very interesting to pay close attention to the potential “double bottom” that we had formed near the 1.34 handle, because if we were to somehow break down below that level, then the market would more than likely fall apart, perhaps reaching towards the 1.30 handle.

I do believe at this point in time, the US dollar is struggling, as the US Dollar Index has ran into a significant amount of resistance and failed again. Because of this, I think all of this plays very well for the move higher, but we may have quite a bit of noise in the short term to deal with.

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