GBP/USD forecast for the week of May 22, 2017, Technical Analysis

The GBP/USD pair had a positive week, breaking above the 1.30 level. That is a psychologically significant number, but I still see an opportunity for the market to reach towards higher levels, specifically the 1.3450 level as it was the top of the consolidation area last year. I believe the pullbacks will continue to be supported, and if we can stay above the 1.29 level I think that the buyers will remain relatively stingy. I think if we can break above the 1.3450 level we will find a significant amount of resistance due to the gap that you can see on the weekly chart. I believe that the market continues to see value hunters coming into the market and picking up the British pound as it was sold off so drastically after the public decided to leave the European Union.

Continued bullish pressure

I think that the market will continue to see bullish pressure, and therefore I am willing to take a longer-term position to the upside. I recognize that there are a lot of areas between here and the 1.3450 level that could cause issues, so we will continue to see volatility, but for those who are willing to hang on for all that should be rewarded, as the market goes higher and more of a grind than anything else. I believe that the market will not be able to sell off for a sustained move until we get below the 1.2750 level, so if we are above there I think there will be plenty of value hunting going on, which of course in turn will drive the British pound higher, especially as it appears that we are starting to see inflation pick up a little bit in the United Kingdom.

GBP/USD Video 22.5.17