GBP/USD Forecast May 16, 2017, Technical Analysis

The British pound rose initially during the day on Monday, but found the area near 1.2940 to be a bit too resistive, and then fell back to the 1.29 handle. As I write this, we are currently seeing a bit of support at that area, and I still believe that the market will ultimately try to go higher. However, things are going to be volatile as we tried to figure out what the exiting from the European Union will do to the British economy. I currently believe that the British pound will do much better than many are expecting, if nothing else because of all the inflationary signs that had previously been seen. Today we get the CPI and PPI numbers coming out of Great Britain, and that could influence this market in general.

Looking for support

I would like to see a longer-term supportive candle at the 1.29 level to go long, or possibly even a breakout. A break above the 1.30 level would continue to add more fuel to the fire as it were, and send this market looking for the 1.3450 level above which is the top of the consolidation area that we are trying to break into. If we break down below the 1.2850 level, the market could breakdown to the massively important 1.2750 level underneath. Either way, is going to be volatile as we continue to deal with the aftermath of the British voting believe the EU, and of course all the ramifications of that. I think longer-term it will be a smart move, but in the meantime, it looks as if there are plenty of doubters. Expect extreme volatility over the next several months, but I still have more of an upward bias when it comes to this pair.
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