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GBP/USD Price Forecast – British Pound Searching For a Bottom

By:
Christopher Lewis
Published: Mar 19, 2020, 14:50 UTC

The British pound broke down towards the 1.15 level again on Thursday, as the demand for US dollars continues to be very critical, but no market can go in the same direction forever and a bounce seems to be in the cards.

GBP/CAD

The British pound initially fell during the trading session on Thursday, reaching down towards the 1.15 handle underneath. That of course is a large, round, psychologically significant figure, and it will attract a certain amount of attention. Ultimately, I believe that the market is going to bounce a bit from here, but I would be stunned to see a break above one point to zero without some type of major economic figure or announcement coming out. Granted, if nothing else the market is definitely due for a bit of a “relief rally”, but that is a short-term trade only. If the market breaks down below the lows of the last couple of days, that opens up a move down to the 1.1250 level.

GBP/USD Video 20.03.20

At this point, the British pound is suffering at the hands of a lack of urgency as it were, fighting the virus. That being said though, the market is likely to continue to be negative from a longer-term standpoint but selling down here is certainly “chasing the trade”, which is one of the easiest ways to lose money. One thing is for sure, you should keep your position size relatively small, simply because the market is out-of-controlling the moment, so nobody really should be risking too much in this type of environment. Once the dust settles though, this should be a nice buying opportunity for the British pound longer-term, as it is so far undervalued at the moment that it is ridiculous. In the meantime, keep your position size small enough to endure the inevitable whipsawed trading.

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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