GBP/USD Price Forecast – British pound tests major level

The British pound has broken down below the 1.20 GBP level at one point during the early hours of Tuesday, but we have since bounced quite drastically as Parliament has sent a motion on the floor to avoid a “no deal Brexit.” That being said, we have seen this movie before.
Christopher Lewis
GBP/USD daily chart, September 04, 2019

The British pound has broken through the 1.20 will GBP level during the early hours of Tuesday but has also turned around to show signs of life again. That being the case it’s likely that we could see a bit of a relief rally in the short term but I do think that the British pound gets hammered given enough time. The 50 day EMA above has offered resistance yet again, and quite frankly even if we do form a perfect hammer, I think this is simply going to be a bounce from what has been a large, round, psychologically significant figure.

GBP/USD Video 04.09.19

However, when you look at the longer-term charts it’s very likely that we go much lower. Granted, we have to turn around eventually but I don’t think that happens until we get the final details of the Brexit, which seems to be culminating in the even more confusion. While Parliament is trying to force through a “resolution to avoid a no deal Brexit”, the reality is the European Union already has the “no deal Brexit” as their default scenario as we have gone three years without showing any signs of resolving the issue. The Brexit is the gift that keeps on giving for British pound sellers and should continue to be the case until we get some type of resolution, regardless of what that resolution is. At this point I have no interest in buying this market, and I believe that the 50 day EMA will continue to be massive resistance.

Please let us know what you think in the comments below

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