GBP/USD Price Forecast – British pound relief rally on Tuesday

The British pound has rallied a bit during the trading session on Tuesday, reaching as high as 1.3175 before rolling over again. We are starting to form an upward channel though, I think the market is trying to front run an interest rate hike. · FX Empire

Christopher Lewis

Updated Tue, Jul 31, 2018, 10:41 PM

The British pound has spent most of the day rallying on Tuesday going into the US session, as the British pound is enjoying a bit of a rally ahead of which should be an interest rate hike. I believe that the market will continue to be very noisy, and perhaps “buy the rumor, sell the news.” I think that the 1.32 level above is going to be resistive, and most certainly the 1.33 level will be as well.

Short-term pullbacks certainly could happen, and if the Bank of England does not raise interest rates on Thursday, you can guarantee that we will drop. In general, I believe that the market is putting in a bit of a “floor” near the 1.30 level, and unless the Bank of England does something reckless, I think that it will continue to offer plenty of support. On the whole, I am a buyer of dips and I think that the market will probably go looking towards 1.35 over the longer-term. But we need some type of clarity with the Brexit before that move could be made. There will of course be a certain amount of indecision in this market, so I would keep my trading position relatively small. If we break down below the 1.30 level we will go looking to test the 1.29 level after that. That being broken to the downside would be extraordinarily negative. I believe that a range bound system with a slightly positive bias might be the best way to look at this market.