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GBP/USD Price Forecast – fear continues to strangle Sterling

By:
Christopher Lewis
Updated: Aug 9, 2018, 04:49 UTC

Fear continues to be a major issue for the British pound, as we continue to see a lot of selling pressure. As we broke down below the 1.29 level during early hours on Wednesday, market participants look likely to continue to find reasons to sell this market. However, this is all news driven so that of course makes it a very volatile and dangerous place to be.

GBP/USD daily chart, August 09, 2018

One of the extenuating circumstances in this pair is that we are in August, and volume could be a bit light as most traders will be away for holiday. However, there seems to be a significant amount of fear out there that there won’t be a deal with the European Union before it’s all said and done. Truthfully, that’s what the WTO agreements are for, but when markets trade on a motion they don’t necessarily pay attention to what’s in front of them. Because of this, headlines can cross the wire at any moment to change the complexity and the outlook of this pair. If there’s some type of deal signed, this market will probably skyrocket before investors even bother reading the fine print. If there is no deal, we could fall again to find much more significant support at much lower levels, possibly even as low as 1.25, or even 1.20!

This is going to be the place to be over the next couple of months, but eventually there will be a resolution. I suspect that this pair goes higher over the course of the next year, but we are at the height of fear right now so obviously it’s going to be very jittery. I would keep my position size small, but at this point I would assume that there is probably more risk for a shock to the upside than the down. After all, at this point you have to wonder who is left to sell?

GBP/USD Video 09.08.18

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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