GBP/USD Forecast October 9, 2017, Technical Analysis

The British pound fell on Friday, as the overall bearish pressure on Sterling continues. Ultimately, this is more or less a build of confidence, as the Teresa May government continues to struggle. These are very important times for the United Kingdom, as we negotiate the exit from the European Union. Because of this, confidence is waning as the political rhetoric continues in the United Kingdom. Ultimately, I think the market is going to be looking for support near the 1.30 level, which of course is a large, round, psychologically significant barrier. If we break down below the 1.30 level, I think the market probably drops significantly from there. Alternately, if we were to rally from here, I’m not interested in buying this market until we would clear the 1.31 handle, and more importantly, the 1.32 handle. A break above that level would be a very bullish sign, and probably have the market looking for the 1.3650 level above. That level is of course where we had gapped lower after the surprise vote believe the European Union, and with that type of momentum, it’s likely that there will be a massive barrier.
I expect volatility regardless what happens next, and I think it’s unlikely that we will get a stable environment anytime soon. Although I think we do find buyers sooner rather than later, the reality is that it’s going to take a certain amount of time for traders to feel confident enough to put money to work. I would wait for at least 24 hours of stability before placing the trade, but if we break down below the 1.30 level, the market could drive down to the 1.35 level if momentum picks up. This is a market that I think will continue to be very volatile regardless of which direction we go.