GBP/USD Forecast February 2, 2016, Technical Analysis

The GBP/USD pair broke higher during the day on Monday, and it now appears that we are trying to turn the market back around, at least for a while. That of course is not a huge surprise, because quite frankly we have been oversold for some time now. However, we are still bearish overall so we are very cautious about buying this market for any real length of time as it’s very likely to start selling off at a moment’s notice. Having said that though, we certainly can make an argument for buying this pair on the short-term move once we break above the top of the range for the session on Monday. Once we do, we will test the 1.45 level, and once that gives way we feel the market could go quite a bit higher. So in that sense it’s almost as if the market is trying to do something, but isn’t quite ready yet.

Given enough time, we do think that this pair does breakout for a few sessions, but again, believe that the longer-term downtrend will continue, mainly because of all of the negativity and of course concerns around the world right now. It isn’t necessarily that the British pound itself is up bouncing to own, it’s just that the US dollar is considered to be the premier safety currency. And with that being said, it will continue to get bought against many other currencies around the world.
If we can break down below the 1.40 level, and that be very bearish for this pair, and we would more than likely continue to go much lower. Having said that though, it looks like we are not ready to do so yet, so at this point in time we will simply look for selling opportunities based on this bounce and signs of potential exhaustion once we get above there. The trend would change to the upside for the longer-term if we can get above the 1.50 handle. At that point in time we would have seen quite a bit of bullish pressure come into the marketplace and take over.