GBP/USD Price Forecast – British Pound Initially Sells Off But Shows Strength Yet Again

The British pound has initially pulled back a bit during the course of the trading session on Wednesday, as a little bit of profit-taking was probably one of the biggest culprits initially, but it was also followed by a short-term algorithmic reaction to the CPI figures in the United States. The market turned around almost immediately, taking advantage of the knee-jerk reaction as the British pound is so highly sought over the greenback. At this point, there is not much standing between current levels and the 1.42 handle.

GBP/USD Video 13.05.21

The biggest problem that this pair sees at the moment is the 1.42 handle, and the fact that it had previously been massive resistance. However, if we can break above that shooting star from several months ago that formed there, then I think it opens up the move for the British pound to go looking towards the 1.45 handle. At that point, I would anticipate yet another fight but when you look at the longer-term charts it is likely that the 1.45 handle will be easier to get through than the 1.42 handle. Furthermore, you have to keep in mind that the market had been overbought for quite some time, so the last couple months have simply been about working off some of the excess froth.

To the downside, even if we do pull back, I believe at this point in time the 1.40 level underneath should be important, as it has previously been so important in the sense that it was massive resistance. This breakout is a huge deal, so now we can start to chip away at the 1.42 level.

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