GBP/USD Price Forecast February 12, 2018, Technical Analysis

The British pound fell apart during the trading session on Friday, breaking down significantly and reaching towards the 1.38 handle. This was in reaction to the diplomat from the United Kingdom suggesting that the UK was willing to leave the negotiations with the EU regardless of whether there was an agreement. This is a bit of posturing, so I don’t think that longer-term and has much effect. · FX Empire

Christopher Lewis

Updated Fri, Feb 9, 2018, 9:23 PM

The British pound has broken down a bit during the trading session on Friday, reaching towards the 1.38 handle. The market participants got spooked when they heard that a British negotiator suggested that they were willing to step away from the negotiations between the UK and the EU. Structurally speaking, the British pound had been a bit too overdone, so it makes sense that we should pull back. At this point, I think there is plenty of support in the general vicinity that we are in, but I think there’s even more support at the 1.3650 level.

That’s an area that has been resistive in the past, and there is an uptrend below there, so I think eventually the value hunters come back. The British pound has a significant amount of resistance above the 1.43 level, so pulling back like this makes sense, as it could be an attempt to build up the necessary momentum to go higher. At this point, I am a “buy on the dips” trader, but I also recognize that we need stability first. I would also be cautious about jumping in with both feet, because this is a longer-term move just waiting to happen, so be patient, and build as the market moves in your way. However, if we were to break down below the 1.3650 level, I think the market could sell off rather significantly. The meantime, patience will be needed.