GBP/USD Price Forecast – British pound gapped lower to kick off the week
The British pound has gapped lower during the trading session on Monday to kick off the week, showing more concern with the Brexit going forward. Headlines will continue to move this market drastically, and I think if we break down below the 1.2850 level, the British pound would then go down to the 1.28 level after that, an area that was supportive recently. Below there, then we have the 1.2750 level, an area that is crucial in the longer-term charts.
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I think that we will eventually see the market turning around and showing signs of support, giving us an opportunity to pick up value as the British pound has been oversold for a very long time, especially based upon the historical charge. However, we need some type of good news with the Brexit to continue to push this market higher. We will eventually get some resolution, but I think in the meantime we will see a lot of nauseating volatility due to headlines and of course posturing in the public eye by both EU and UK officials. The most recent spat between Boris Johnson and Teresa May could be the catalyst for the gapped lower, as people worry about whether or not the United Kingdom can pull everything together. In the end, something will get worked out, because quite frankly it has to. Once that happens, the British pound will turn the entire trend around and continue to grind higher. In the short term though, I would only be aiming for 50 or may be 100 pips.