GBP/USD Price Forecast – British pound pulls back after initial gains

The British pound initially rallied during the trading session on Thursday but gave back some of the gains as we reached towards the 1.3150 level. At this point, I do find it telling that the British pound cannot gain against the US dollar like some of the other currencies have. However, there is hope underneath.
Christopher Lewis
GBP/USD daily chart, February 01, 2019

The British pound rallied initially during the Thursday session but did start to give up gains as we reached towards the 1.3150 level. I think the market has shown that we are still slaves to the occasional headline involving the Brexit, but as we have broken through a major downtrend line, the 20 day EMA, and a couple of significant major levels as far as numbers are concerned, I do think there is support underneath. When looked at from a longer-term perspective, you can make out that the 50 day EMA, the red moving average on the chart, is looking to break above the 200 EMA, which of course is black. If that happens, we get what is known as a “golden cross”, which is a longer-term bullish signal.

GBP/USD Video 01.02.19

As you can see, I have a yellow ellipse sitting on top of the trend line, and this is the area where I think buyers will probably return. It just so happens to coincide quite nicely with the 1.30 level, which of course will attract a lot of attention as it is a large, round, psychologically significant figure. I think the 200 day EMA, the downtrend line, and of course the 1.30 level all coincide to make it interesting area to start buying. Beyond that, the Federal Reserve is very likely to remain somewhat neutral, if not dovish. If that’s going to be the case that works against the greenback. All we need now is the United Kingdom Parliament to get things together.

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