GBP/USD Price Forecast January 23, 2018, Technical Analysis

The British pound rallies a bit during the trading session on Monday, to reach towards the psychologically important 1.40 level. That’s an area that I think could cause a little bit of resistance but I certainly don’t see the reason as to why we won’t continue to go higher. Short-term pullback should be buying opportunities, and I believe that the 1.38 level underneath should be supportive. I think that’s an area based upon the structural action that we have seen lately that should be reasonably important. If we break down below there, then I think we go looking towards the 1.36 handle.

Longer-term, I do believe that the British pound should continue to go much higher, perhaps reaching towards the 1.45 level after that as it is a large, round, psychologically important number as well, and an area that in the past had mattered. I do think that longer-term we are going to find reasons to go higher, and I think that the US dollar is one of the main drivers as we continue to see a lot of selling when it comes to that currency.

Expect volatility, but that volatility should be a nice buying opportunity, and I think that the longer-term target should be closer to the 1.50 level, perhaps by the end of the year. The alternate scenario could be a breakdown below the 1.34 handle, but I would be rather surprised to see that, and at that point I would anticipate that the market would try to reset closer to the 1.30 level.

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