GBP/USD Forecast: British Pound Continues to Consolidate at Low Levels

• In my daily analysis of the GBP/USD pair, the first thing that I notice is that we have been consolidating around the 1.2650 region, an area that seems to be important from a short-term perspective.
• That being said, I think there are many more important areas it should be noted that have already proven themselves, and therefore I think we need to be watch both of them very closely.

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The 1.25 level is an area that is crucial, as it is a large, round, psychologically significant figure, and it’s also an area that has proven itself to be massive support more than once.

This is an area that I think continues to attract a lot of attention, and therefore I think we’ve got a situation where traders will be looking for some type of buying opportunity in that area. However, if we were to break down below there, then the market could fall apart and we would probably see the US Dollar take off against most currencies, not just this one.

To the upside, the 1.2750 level is an area that I think would be a significant resistance barrier, but if we can break above there then the market probably goes looking to the 200 Day EMA above, which is closer to the 1.2850 level. In general, this is a market that I think continues to be very noisy, and therefore you need to be cautious with your position sizing, but I think we are doing whatever we can to find some type of footing and perhaps even turn things back around.

US Dollar

Keep in mind that most of what we are seeing in the Forex market revolves around the US dollar and whether or not it is rising or falling. All things being equal, this is a market that is highly dollar centric, as the Bank of England has recently cut rates, and now people are starting to focus on the idea that perhaps the Federal Reserve might be forced to sit still for a while. Rallies at this point in time would still have to prove themselves to be sustainable for me to get aggressively long.

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