GBP/USD Price Forecast – British pound falls for Wednesday session

The British pound has broken down a little bit during the trading session on Wednesday, reaching towards the 1.33 level underneath, which was previously resistance. I believe that the market is going to cause a bit of volatility over the next 24 hours, especially with the FOMC meeting at the end of the session on Wednesday, and at this point I think it is likely that we will get some type of major reaction. I believe that if we can stay above the 1.33 level, the market will continue to rally, perhaps reaching towards the 1.3450 level.

Otherwise, if we break down below the 1.33 level, it’s likely that we could go to the 1.32 level underneath. A breakdown below that level of course would be very negative and could send this market relaying at that point. I think a lot of that would come down to perhaps a very hawkish statement coming out of the FOMC statement, and perhaps a sign that we are going to see a significant amount of US dollar strength going forward, which would be very negative for this pair of course. In general, I believe that we are going to see a lot of noise, but ultimately I believe that the market is already priced in as far as interest rate hikes are concerned, and unless the Federal Reserve signifies that we are going to get more than three hikes. If it is particularly aggressive, that could catch the market by surprise, just as a dovish statement would. I would expect a lot of short-term noise, and then a reaction to the 1.33 handle.