GBP/USD Forecast: British Pound Drops on Tuesday
- I’m paying close attention to the fact that we have continued to fall quite drastically, and therefore it’s likely that we could see a revisit of the previous resistance barrier, although at this point in time it is still a little early to call for that.
The pullback has been rather drastic, but I think a lot of this comes down to the idea that perhaps the US dollar is oversold to begin with. You cannot go straight up in the air against the US dollar without some type of massive fundamental reason for this, and the idea that the Federal Reserve is going to cut 100 basis points between now and New Year’s Day is quite ridiculous at this point in time. If we do see that happen, then it’s likely that a lot of people will be looking to buy the US dollar anyway, because they will be jumping into the US Treasury market, as it would be a sign that the Federal Reserve has lost control of the economic situation, something that they tend to do every few years anyway.
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1Technical Analysis
The technical analysis for the GBP/USD currency pair is still very bullish, and it’s interesting that if we drop from here, we probably meet up with the 1.30 level, an area that will also be thought of as the previous resistance barrier. It also is backed up by the 50-Day EMA, which is rising quite drastically. That is an indicator that a lot of people pay close attention to, so I think it makes sense that traders will be watching for some type of bounce in that general vicinity, of course this assumes that we drop down to that area.
On the other hand, if we break above the 1.3150 level, then the market could go looking to the 1.3275 level again, which is a level that we had just pulled back from previously. With all that being said, I think you’ve got a situation where buyers will jump back into this market, but I think what we are now seeing is a situation where people are looking for a little bit of value.
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