GBP/USD Price Forecast – Sterling Continues to Build Base

The British pound has rallied just a bit during the trading session on Wednesday but need to keep an eye on the Federal Reserve and whatever they decide to do with the tapering situation. Ultimately, if the US dollar starts to strengthen, then you will obviously see it happen here as well. With that being the case, I think that you are more than likely going to see a situation where we are simply waiting to see what Jerome Powell says about the tapering of bond purchases, especially as we try to figure out whether the economy is going to grow or slow.

GBP/USD Video 16.12.21

If we can break out to the upside, I will not be a buyer, I will simply wait for signs of exhaustion that I can sell. More likely than not, it will be somewhere near the 1.34 handle, an area that I think given enough time will offer significant resistance. This is especially true considering that the 50 day EMA is racing down towards that area, which of course is a technical indicator that a lot of people pay close attention to.

The market of course has been rather negative for a while, so a bit of a bounce would make a certain amount of sense. At this juncture, I believe that this is more of a “fade the rallies” type of situation, but we will have to wait and see whether or not that actually plays out. Given enough time, it is very possible that we could go looking towards the 1.30 handle underneath, which is a massive support level on longer-term charts here in the cable pair.

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