GBP/USD Forecast December 18, 2017, Technical Analysis

The British pound fell during the trading session on Friday, slicing through the 1.3333 handle. The shooting star looks very likely to show that we are going to continue to go lower, but I think there is an uptrend line on the longer-term charts, mainly the weekly time frame, that should continue to be very supportive. Ultimately, I believe that the buyers will return, as the uptrend has been rather strong over the last year. I also believe that there are a lot of value hunters out there looking at the British pound as being undervalued longer-term, and historically speaking this is correct.

I think if we can break above the 1.35 handle, that is a sign that we continue to go much higher, reaching towards the 1.3650 level where we had seen a previous gap. A break above that level is a longer-term “buy-and-hold” scenario, something that I expect to see during 2018. In the meantime, headlines coming out of Brussels and London will continue to move this market, as we have seen so much uncertainty when it comes to how the divorce proceedings will in between the European Union and the kingdom. This market should continue to be bullish longer-term, but in the meantime, I think there is a lot of “scared money” willing to dump the British pound at the first sign of trouble. We also have the tax bill in the message, and that could put money back towards the US dollar, but I think longer-term that will be but a blip on the radar. It’s not until we break down below the 1.31 handle that I would be concerned.

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