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GBP/USD Weekly Price Forecast – British pound breaks major support

By:
Christopher Lewis
Updated: Dec 14, 2018, 18:36 UTC

The British pound broke down during the week, slicing through the 1.27 level as there was a “no confidence vote” for Teresa May. She did survive it, so that was a brief reprieve for the British pound, but as you can see the trajectory continues lower.

GBP/USD weekly chart, December 17, 2018

The British pound broke down during the week, slicing through the 1.27 level, an area that has been rather supportive for a while. This is the bottom of a descending triangle, which measures for a move to the 1.22 handle. I do believe that we get down there, mainly because there are a lot of fears of a hard Brexit going forward. I believe ultimately that the fact that Teresa May went to the EU and they basically explained to her they are willing to renegotiate is bad news for the British pound. However, keep in mind that there are a lot of algorithmic traders out there involved in this pair, willing to jump in and out of the market based upon a headline. This causes short-term spikes to the upside, but then again reality sets in and they get faded. I think that is going to continue to be the case between now and March, as we will have a lot of volatility but with a downward slant.

GBP/USD Video 17.12.18

However, if the British to sign some type of Brexit agreement, currently being debated between the British Parliament and Teresa May, then we could see a rally in the Pound. I don’t think we’re going to see that anytime soon, so the odds of a hard Brexit are increasing, and therefore you will continue to see a bearish pressure here as well. On the other side of the Atlantic Ocean, you have the United States which looks rather healthy, so it makes sense that we continue to break down.

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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