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GBP/USD forecast for the week of January 15, 2018, Technical Analysis

Christopher Lewis
Updated
The British pound had a volatile week, initially falling, but turned around to find enough strength to break out to a fresh, new high. The US dollar is most certainly on its back foot, and the British pound is benefiting from this move, just as many other currencies around the world are.

The British pound initially fell during the week, but found enough buying pressure to break above the 1.3650 level, an area that I have been talking about for some time now. I believe that the story is more about the softness in the US dollar than anything else, so with that being the case I recognize that although the British pound is oversold, the most important thing in this equation is going to be the US dollar losing value.

Technically speaking, when you look at the 1.3650 level, breaking above this level is important. It is the beginning of the gap that sent the British pound much lower. I believe that we will continue to see bullish pressure, and that short-term pullbacks will offer a lot of value the people will be looking towards, and the opportunity for those who have been short at this major area to cover without losing too much. In general, market memory dictates that these gaps need to be very violently broken, and that looks to be exactly what’s happening. Because of this break, I suspect that the market will go looking towards the 1.45 handle, which could be reasonably quick, as the market had broken down so rapidly from this area. I believe that the uptrend is just beginning, but there will obviously be times when the market pulls back and offers value. I suggest you start looking for it.

GBP/USD Video 15.01.18

This article was originally posted on FX Empire

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