- The British pound pulled back just a bit during the trading session on Tuesday as we are hanging around the 1.34 level.
- The 1.34 level has been important more than once.
- And I think at this point in time, it does make a certain amount of sense that we see a lot of back and forth.
- The market is starting to suggest that maybe they could break out to the upside. This is what momentum over the last few months may suggest, but we have work to do.
And the candlestick from the Monday session was rather impressive. That suggests that we have the ability to eventually break out to the upside and maybe even go as high as the 1.3675 level where we had a resistance barrier. On the other hand, this is an area that has been important multiple times in the past. And if we pull back from here, it's likely that we could drop down pretty nastily. The 1.32 level I think is support though. So, it's really not until we break down below there that I would start shorting.
US Dollar Under Attack Overall
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Keep in mind that the US dollar of course has been under attack by multiple currencies at the moment and the British pound does seem to be seeing a lot of inflows still despite the fact that it is most certainly overbought. I like the idea of attempting a long in this GBP/USD currency pair on either a break above the highs of the last couple of days or a pullback in a bounce, especially near the 1.32 level.
If we break below the 1.32 level and we see the U S dollar strengthening against other currencies as well, then it's time to start selling. In that environment, we may have seen a complete shift in sentiment.
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