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GBP/USD Price Forecast – British pound show signs of life

By:
Christopher Lewis
Updated: Sep 25, 2018, 04:43 UTC

After the ridiculous move last week, it is a bit surprising to see that there is some continuation in the rally from the British pound and early hours, but at this point it certainly looks as if that’s going to be the case.

GBP/USD daily chart, September 25, 2018

The British pound rallied significantly during trading on Monday, as we broke above a minor resistance barrier. Looking at the charts, I think that we may wipe out the entirety of the negative move, but of course were only one headline away from changing that in the blink of an eye. With that in mind, the British pound is something that you are either investing in, or simply avoiding. If you’re investing in it, then you are using small positions at best.

With this turnaround, I suspect that the market will probably eventually try to go looking towards 1.3250 level again, an area that was the scene of massive supply as people freaked out about comments made by Teresa May of last week. Ultimately though, it’s likely that there will be a tweet, headline, or something else that will make the market swing around violently again. It’s because of this that your position size must be small in this market as it does not have much in the way of support or resistance that lasts more than a random comment.

With that in mind, I do think that historically we are cheap at this level, and it’s likely that we are going to see market participants continue to buy the British pound when it does dip. After all, we will eventually get the Brexit, the question is whether or not there will be a deal. At the end of the day it doesn’t matter, investors want certainty not details.

GBP/USD Video 25.09.18

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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