2017 Forecast for GBPUSD
The Pound is extremely bearish against the USD. Trading at price levels that historically have not been touched makes it prone to severe drops until it eventually finds support. The question however is where.
A Fibonacci retracement and a Fibonacci extension tool have been used in collaboration to determine the next likely take profit zones of the downtrend. From the chart above the following can be noted-
- The RSI lacks any significant bias to the upside. Hence the bearish trend still likely has some way to go.
- The weekly pivot point, outlined by the solid green horizontal line, is significantly above current market price.
- The relationship between price and the 200 MA does not imply any immediate change of bearish sentiment for the pair.
The Fibonacci extension tool outlines the next viable take profit price as 1.1428 (61.8 fib extension). This price zone has some semblance to a support zone as well, judging from the position of the bear channels support line. The next fib extension level is at 0.9449, however it is not expected (not at least in the medium term) for price to get anywhere close to here. In summary, the mid-term is very likely to see price oscillating between 1.1428 and slightly below it.
FUNDAMENTAL FACTORS TO WATCH:
The British Prime Minister has recently implied that the possibility for a ‘hard brexit’ is becoming more and more likely. A hard Brexit will potentially impact the trade figures for the Uk and although certain agreements may come in play its unlikely to favor all sectors of the economy. This level of uncertainty will keep its weight down on the Pound.
The other major factor to the Pounds performance is the pending decision by the Supreme court on whether or not the Prime Minster has to go through Parliament in triggering article 50.
Some respite will likely come to the currency if Parliament is involved because it is expected that the diverse opinions may lead to an eventual softer Brexit. If however it is the reverse, the sell-off could intensify.