GBP/USD Weekly Price Forecast – British pound shows resiliency

The British pound went back and forth during the trading session on Friday, just as we did during the week. We have broken above the 1.3125 handle, which of course is a good sign. That was an area that was significant resistance previously, and it looks as if the market is aggressive and it’s uptrend. I think at this point, every time the market sells off value hunters come back into the British pound because it is historically cheap. We have recently broken above the downtrend line, so that should not be forgotten. It’s not uncommon to see a downtrend line get broken, followed by some back-and-forth consolidation, before we can break out to the upside in change the overall trend. I believe that’s what’s happening right now, and eventually we will get some type of resolution to the Brexit negotiations.

Ultimately, you should look at the British pound as being cheap overall, as the market participants certainly are starting to do so. I think that the 1.30 level will start to offer a lot of support, just as the previous downtrend line will. Once we finally do get the break out, I think the market probably goes hunting for the 1.35 level. I believe that the certainty that comes with a conclusion to the negotiations will be reason enough for the British pound to rally. If they get a decent deal, you may see traders picking up the Sterling for a huge move higher. I would also point out that the 61.8% Fibonacci retracement level has offered support at the lows.

GBP/USD Video 15.10.18