GBP/USD Weekly Price Forecast – British Pound Recovers After Initial Selling Frenzy

The British pound has fallen rather significantly during the course of the week but then also recovered to form a bit of a hammer. We have bounced from the 50 week EMA which of course is a good sign, and it suggests that perhaps we may trying to reenter the previous consolidation area. As you can see, I have a line drawn at the 1.37 level and the 1.35 level, and it is essentially going to be thought of as a “support zone” that keeps the uptrend intact.

GBP/USD Video 26.07.21

If we were to break down below the 1.35 handle, then I think it opens up a massive selling opportunity to reach towards the 1.30 handle. A lot of this is going to come down to whatever happens next with the US dollar and the bond market. The British pound of course is more or less a “risk on asset”, so therefore if the markets continue to see risk appetite increase, then it is likely that the British pound will benefit as well. To the upside, the 1.40 handle would be a target initially, perhaps reaching even higher to test the 1.42 handle.

I think at this point in time we will see a lot of choppy volatility more than anything else. With that being the case, the market is likely to be very noisy in general. At this point, I would be cautious with my position, and I would also point out the fact that the 1.42 level above is a massive resistance barrier that goes back multiple years as it is so important.

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This article was originally posted on FX Empire

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