GBP/USD Price Forecast – British pound pulls back

The British pound initially pulled back during the trading session on Wednesday, but found enough support just above the 1.3125 level, an area that has been both support and resistance as of late. I believe that most people value the British pound much more than pricing has been telling us over the last several months, and as we are at historically cheap levels, there are plenty of value hunters out there willing to step in and pick up the pound “on the cheap.” This shows itself every time we pull back after a negative headline, as the algorithmic traders will sell off the British pound, only to see the buyers come back in who are looking for value and are quite frankly probably more longer-term inclined. Overall, a quick glance at the longer-term charts shows that the British pound is much more comfortable near the 1.60 level, and I think that eventually we will return to those historical norms.

If we did break down below the 1.3125 handle, I think the next major support level is the previous downtrend line, and of course the 1.30 level underneath which has not only structural importance, but psychological importance as well. On the whole, I believe that this market will eventually find reasons to go higher, but it may take several attempts. With that, I would scale in quietly and only add as the market works out in my favor. Currently, I have no interest in shorting this pair, as the trend seems to be changing overall.

GBP/USD Video 27.09.18