GBP/USD Forecast: Breaks Above Short-term Resistance

 I would not hold my breath one way or the other though, because I think the only thing you can count on is a lot of volatility in choppiness, and I think Friday probably will be a whole lot better since the American firms will be offline.

  • The GBP/USD has continued to show signs of strength on Thursday, as we continue to see the US dollar lose strength.
  • Ultimately, this is a pair that is on the precipice of making a bigger move, and as we are getting close to the top of the resistance barrier, it’ll be interesting to see how this plays out.
  • After all, you have a lot of inflation in the United Kingdom, and you are starting to see inflation drop a bit in the United States.
  • There is also the risk appetite component that could come into the picture here.
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On a break above the 1.22 level, then I think there’s a good chance that this market really takes off, perhaps changing the trend altogether. In that scenario, my target would be the 1.25 level. On the other hand, if we turn around and break down below the 1.20 level, we could drop back down to the 1.18 level to find buyers in that area. I would not hold my breath one way or the other though, because I think the only thing you can count on is a lot of volatility in choppiness, and I think Friday probably will be a whole lot better since the American firms will be offline.

Count on Back-and-Forth Actions

One thing I think you can count on is a lot of back-and-forth action because quite frankly so many different people are focusing on so many different things. Keep in mind that the United Kingdom is likely to go into a 2-year recession according to the Bank of England, and therefore it’s difficult to get overly aggressive with the British pound, but now the price will be the only thing that matters. If it’s going higher, you must follow, at least until the market tells you to go in the other direction.

 While fundamentals give you an idea, the reality is that the market will do whatever it wants to do, and right now it looks like it’s trying to break above the 1.22 level and go higher. I need to see a daily close above there before I give it the “all clear” to start putting my money into. Looking at this chart, we are at a make-it-or-break-it type of moment.

GBP/USD

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