July 29, 2021

GBP/USD Price Forecast – British Pound Gets Overextended

The British pound initially tried to rally during the trading session on Wednesday, showing signs of exhaustion at the 1.33 level. That is an area that has previously had a gap and therefore it makes quite a bit of sense that we would see a pullback. Ultimately, this is a market that I think will find plenty of buyers underneath, especially near the 1.30 level. That is an area that not only is a large, round, psychologically significant figure but it is also where the 50 day EMA is currently trading.

The area between the 50 and the 200 day EMA has been a bit of support, and I think that it is only a matter of time before we would see buyers in that general vicinity. That being said, I think that a nice “buy on the dips” scenario could present itself. Looking at this chart, it has gotten ahead of itself so this all makes quite a bit of sense as traders would look towards the market for value. We are starting to see a push higher due to the fact that the Brexit negotiations seem to be going better, but we have seen this movie before, so I would not hold my breath.

Looking at this chart, we are most certainly in an uptrend, and that is worth keeping in mind, but that does not mean that we go straight up in the air forever. Furthermore, there is more of a “risk off” type of situation, it could cause a bit of an issue with this market as well.

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