GBP/USD Price Forecast – British pound shows signs of exhaustion again

The British pound initially tried to rally during the trading session on Monday but then broke down a bit to show signs of exhaustion. By doing so, it looks as if we are trying to break down again as the rally may have gotten a bit ahead of itself. The 1.25 GBP level has offered significant resistance, because not only of the fact that it is a large, round, psychologically significant figure, but it is also the 38.2% Fibonacci retracement level.

GBP/USD Video 24.09.19

Looking at this chart, the rally has been a bit overdone, and although a significant amount of gains have been made, when you look at the longer-term chart it’s obvious that the balance has been but a blip on the radar of the overall market. With that, I fully anticipate that we will probably go looking towards 1.20 GBP level, and then possibly even lower than that. It’s possible that the Brexit could continue to cause the market lower, but ultimately it’s a headline driven situation. The easiest way to trade this market is simply follow the overall trend, which is still to sell the market as rallies appear, because quite frankly headlines don’t help Brexit until we get some type of final decision. Once we get that we can start to think about the idea of buying this pair, but right now it’s far too early to consider that. A break down below the 50 day EMA should bring even further selling pressure, and at this point that looks to be very likely. It’s not until the daily close above the 200 day EMA that I would be convinced of bullish pressure.

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