GBP/USD Price Forecast – British pound rolls over ahead of boat

The British pound initially tried to rally during the trading session on Tuesday but rolled over to form a less than impressive candlestick ahead of the vote coming out of London. Quite frankly, the only question now is whether or not the UK parliament will vote against the Brexit deal that Teresa May has put forward, but how bad will the boat be. If the vote is very poor for Teresa May, then you have to wonder whether the Labour Party will start to put together a no-confidence vote through the parliament. If they do, that will throw turmoil into the British pound, as people will have no idea what to think the next.

GBP/USD Video 16.01.19

I suspect that the pound had gotten ahead of itself, and the 200 day moving average above will of course attract a lot of attention as well. Ultimately, I think that the pair will continue to drive lower, unless of course for some miraculous reason the Brexit deal gets agreed-upon, which would be a complete shock, and probably have people covering short positions against the British pound out of fear, and perhaps even confusion.

I believe that the 1.27 level underneath is support, so if we can break down below there it’s a very good sign for the sellers that we will probably go down to the 1.25 handle. The alternate scenario is if we break above the 200 day EMA, then the market probably goes looking towards the 1.35 level longer-term. Ultimately, I believe that we will see more negativity ahead.