The British pound has been very choppy over the last 24 hours, reaching down towards the 1.3333 handle, which is an area that I continue to mention as it is important. This is an area that was previously resistive, but now it looks likely that it should be supportive. By forming a hammer on the hourly chart, it looks likely that a bounce is about to happen, perhaps sending the British pound back towards the 1.34 level above. A clearance of that level should send this market looking for the 1.35 handle next. I also recognize that we could move in the other direction, and a breakdown below the 1.33 handle has this market looking towards the 1.31 handle underneath which is going to be support. That is an area that I think is vital as it coincides with a nice uptrend line, so obviously we need to see those areas hold in general. I think this will end up being a buying opportunity before it’s all said and done though, especially considering that US GDP missed slightly during the day.
I also believe that historically cheap British pound pricing is going to be something that people are paying attention to as well. Longer-term traders are looking at this as an opportunity to pick up the Pound on the cheap, and will course slowly and to a larger position. As the fallout from the United Kingdom leaving the European Union dissipates a bit, I believe the people will become much more comfortable owning the British pound, and it should rally from here. I believe 2018 is going to be where we see buyers jump back in.
GBP/USD Video 22.12.17
This article was originally posted on FX Empire