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British Pound GBP Trend Analysis

Currencies / British Pound Oct 14, 2019 - 04:36 PM GMT

By: Nadeem_Walayat

Currencies

GBP Long-term Trend

What stands out from the long-term chart is that GBP has been in a downtrend for many years, a good 20 years in fact for I recall sterling trading at over £/$ 2.0 a few years earlier than this graph. So whilst the clueless mainstream press have been crowing since 23rd of June of how the Pound has collapsed following Brexit. What they fail to understand is that Pound would have fallen regardless of the results of the 23rd June 2016 referendum because it's in a bear market.


All that the rally in run up to the referendum was is a counter rally in a bear market. How low would the British Pound have fallen if the UK had voted to REMAIN? Well to at least to 1.30. So maybe not as low as recent sub 1.20 levels 20 but 1.30 was still doable in GBP's long-term bear market.

The second thing that stands out is that after sterling breaks to new lows it then tends to settle into a multi-year trading range as was the case from 2009 to 2015, a 25 cent trading range of between 1.675 and 1.42.5.

The current range is for an approx 30 cent trading range from 1.15 to 1.44. This suggests that the downside is limited to around 1.15 with probability current price action resolving in a bull run higher towards the upper end of the trading range resistance area of 1.37.5 to 1.44 with key resistance on the way at 1.33.

GBP Trend Analysis

GBP is in a downtrend off of the 1.33.5 high. Most recent price action saw a bounce off of support at 1.20. Which given the spike nature of the 2016 1.15 low then could hold. However Westminister chaos induced volatility is high which means on a short-term basis sterling could revert to trending lower, as GBP was / is over sold so was due a technical bounce. So the most recent move higher could just be that and nothing to do with Westminister Brexit chaos.

Support is at 1.20, Resistance is at 1.28, then 1.30 and 1.33. Further is 1.37 and 143.

The rest of this analysis has first been made available to Patrons who support my work: https://www.patreon.com/posts/british-pound-vs-29840414

So for immediate First Access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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