GBP/USD Price Forecast – British pound shows signs of strength as North Americans jump on boardThe British pound had initially drifted lower during European trading, but the Americans came in and started buying immediately. We continue to see a lot of resiliency when it comes to the British pound, and quite frankly I think that we should continue to see a lot of value hunting in this market.
The British pound continues to show its resiliency on dips, as the Americans came in and pick this market up rather drastically. The extraordinarily bullish and golfing candle on the hourly chart shows just how strong things are underneath. Remember, the British pound has been beaten up to historically low levels, but I think at this point it’s likely that every time we get a dip on the good/bad news, it’s likely that value hunters will come back in. I think the 1.30 level is significant in its psychology, and therefore it makes a lot of sense that we would see market participants continue to try to take advantage of value near that level. If we can break above the 1.3125 handle, then we bus through a significant barrier and should allow more buying beyond that.
The previous downtrend line has offered support, and I think is essentially the “bottom” in the market. In general, it’s very likely that we continue to see short-term pullbacks based upon some type of headline that offers an opportunity to get long of this market. In general, I believe that we will eventually break out to the upside, as historically we are extraordinarily cheap, and I think longer-term “buy-and-hold” traders are jumping into this market to pick up the British pound as it selloff has been a bit overdone. I have no interest in shorting the pound at this point.