GBP/USD Forecast October 25, 2017, Technical Analysis

GBP/USD daily chart, October 25, 2017

The British pound initially tried to rally during the day on Tuesday, but found the 1.3225 region to be too resistive again, as we have seen the market pull back from that level a couple of times now. The 1.3250 level above there is even more resistive, so it’s not until we break above there that the longer-term buyers will be willing to hold on to the currency. Breaking down significantly is not a huge price, because we found enough support near the 1.31 level underneath, as we have done several times. I think that we are entering a longer-term consolidation area that the market participants are comfortable trading. If we can break above the 1.325 level, perhaps due to UK GDP numbers coming, we could then start buying the British pound longer term.

If we were to break down from here, there is a significant amount of support near the 1.30 level underneath, and I think that’s essentially going to be the floor in the market. This could be looked at as a short-term buying opportunity, as I think we are bit overdone and we have seen a massive amount of support come back into the market near the 1.31 level. Ultimately, this is a market that will continue to be very noisy because of the concerns coming out of the United Kingdom leaving the European Union, and that will continue to be the biggest concern coming to the economic outlook for the UK. I think that with both central banks looking likely to raise interest rates, this could continue to be a norm for the pair, massive volatility. Looking at short-term trading systems that rely on range bound markets might be the best way to trade this currency pair over the next several sessions as we have seen the stagnation.

Written by FX Empire