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GBP/USD Price Forecast – British pound flat on Thursday

The British pound initially tried to rally during the day on Thursday, perhaps in reaction to the idea of the Chinese coming to America and it was more of a “risk on” day than originally thought, but at the end of the day we still have the Brexit concerns when it comes to the British pound, and we have broken down through a significant support.

The British pound initially tried to rally on Thursday, but ran into some trouble at 1.2735, an area that extends to the 1.2750 level, a major support level on the longer-term charts. Because we could not break above there, I think we are simply seeing a short-term bounce that traders will come in and short at the first opportunity. The market is using the 1.27 level as minor support during the day, but I don’t think that changes the overall outlook of this market in general. The 1.25 level will be the target, and it should be important as it is a large come around, psychologically significant figure and of course has been structurally important in the past.

If we were to break down below the 1.25 level, we could see an acceleration of selling, and perhaps the capitulation phase of the selloff. I believe that the majority of the Brexit selling has already been factored in, but we certainly have some more downward pressure coming. However, I think that we could see a massive flush, and then a rebuilding scenario will start to occur once people realize that the United Kingdom was once separate from the European Union, and even had an empire. Beyond that, one thing that will make itself apparent in the next couple of years is how many problems the European Union itself has. With the risk of contagion to European banks on so many different economies, money may go flooding into the United Kingdom from the European Union as safety bid down the road.

GBP/USD Video 17.08.18

This article was originally posted on FX Empire

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