GBP/USD Price Forecast – British Pound Gives up Early Gains

The British pound initially rallied during the trading session on Monday but gave back the gains rather quickly as it looks like the British pound is still having to deal with the idea of being a bit overbought. At this point, I do believe that it is only a matter of time before the market goes looking towards the 1.3750 level underneath, which is a major support level based upon the previous resistance that we have seen there. “Market memory” becomes a major issue, and I do think that a lot of people will be paying close attention to it.

The 50 day EMA is also sitting there at the 1.3750 level, so I am very interested in buying in that general vicinity if we get down there. To the upside, the 1.42 level of course is resistance as we have seen of the last couple of days, and when you look at the weekly chart it is easy to see that there has been a lot of supply in that general vicinity. Because of this, I like the idea of buying the dips to build up the necessary momentum to get above that level. If we do break above the 1.42 level, then it is likely that the market could go looking towards 1.45 level. At this juncture, I think that there is still plenty of reason to think that the market is going to go higher, but it just has gotten a bit ahead of itself and therefore we need to either give back some of the gains or simply go sideways in general. In general, this is a market that I think will continue to look at the stimulus coming out of America as a potential driver as well.