GBP/USD Price Forecast – Sterling takes off after Trump commentsThe GBP/USD pair rallied rather significantly during the trading session on Friday, reaching towards a critical supply area near the 1.3075 handle after Donald Trump tweeted that the US dollar was being unfairly strengthened as interest rates around the world it remained far too low. For some reason, market participants read this as a sign that interest rates were going to be put on hold in the United States. The funny thing is, he doesn’t have that power and just ½ an hour before one of the Federal Reserve governors reiterated the need to continue to raise rates.
The British pound rallied significantly during the trading session on Friday, slamming into the supply area at 1.3075. There is a massive barrier between there and the 1.31 handle, so although I don’t think it will be impossible to break above there, I also recognize that we may have gotten a bit overextended in far too short of a time. At this point, I anticipate a pullback and then perhaps another rally. However, if we were to break above the 1.3120 level, then I think the market could go to the 1.3150 level, followed very quickly by the 1.32 level.
I believe that the 1.30 level underneath has shown itself to be rather impressive and supportive, and I believe that the US dollar is overextended at this point. That’s not just against the British pound, but against other currencies around the world in general. I see a coordination between the EUR/USD, AUD/USD, and GBP/USD pairs. Quite frankly, I think that this market is one that will benefit from US dollar weakness overall, not necessarily British pound strength. I believe that the next couple of days will probably be US dollar negative, but of course headlines can change that at the blink of an eye.