GBP/USD Weekly Price Forecast – British pound rallies but fails at major level

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The British pound rallied during the week, reaching towards the 1.3125 level, beginning of a flush lower on the daily charts. If we can break above that level on a daily close, this market could turnaround completely and go much higher. · FX Empire

Christopher Lewis

Updated Fri, Sep 14, 2018, 10:51 PM

The British pound rallied during the week, slicing through a downtrend line that I have been paying attention to. However, the 1.3125 level above has been significant previously, as it was the scene of the major flush lower on the daily chart. If we can close above that level on a daily close, then I think the market is free to go much higher. That doesn’t mean it’s going be an easy shot higher, but it certainly would be a sign that the overall trend is starting to turn back around. With that being the case, it would become more of a “buy-and-hold” scenario. However, I think what we need is some type of good news out of the Brexit negotiations. I do believe that we are getting close to that good news, but it is going to take a certain amount of certainty to push this pair higher. In the meantime, we could get the occasional pullback but we clearly are fighting to change the trend.

If we were to break above the 1.3125 level on a daily close, I think initially we would go looking towards the 1.34 handle, and then possibly the 1.36 level. Longer-term, I would look for a complete move back to the recent highs at the 1.44 region as we will have bounced from the 61.8% Fibonacci retracement level, a common move in the Forex world known as the “golden ratio.” I think the next couple of weeks will be crucial for this pair.