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GBP/USD forecast for the week of December 12, 2016, Technical Analysis

By:
Christopher Lewis
Updated: Dec 12, 2016, 05:43 UTC

The British pound had an initial move higher during the week, but turnaround form a negative candle as you can see on the chart. I think that we are

GBP/USD weekly chart, December 12, 2016

The British pound had an initial move higher during the week, but turnaround form a negative candle as you can see on the chart. I think that we are trying to rollover a little bit, and quite frankly have no interest in buying this market from the longer term perspective anyhow. I think that the 1.2850 level below continues offer a bit of the ceiling, and I also believe that the market is not done testing the 1.20 level below. That’s not to say that it’s can be an easy move, far from it but I do believe that the negative pressure continues in the British pound going forward.

Remember, there’s a lot of concern about the exit from the European Union, we haven’t even seen what that’s going to do yet. Uncertainty is not something that the markets like, so of course they will avoid the British pound longer-term against certain more “stable” currency such as the US dollar. On top of that, we have the Federal Reserve more than likely going to raise interest rates at least once, if not several times over the next several months. If that’s the case, then it makes sense that the US dollar continues to strengthen overall, and of course British pound will be different as far as what happens to it against the greenback. I’m not saying that you can’t by the British pound, I just say that you probably shouldn’t do it against the world strongest currency.

Rallies of this point in time will continue to be selling opportunities, especially in shorter-term charts such as the daily and four hour time frames. Not only do I find the 1.2850 level to be resistive, I also believe that the noise all the way to the 1.34 level will be resistive as well. In other words, it’s all but impossible to buy this pair from a longer-term perspective at the moment. However, I continue to monitor the monthly charts for some type of reversal signal. So far, I don’t have it.

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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