General Analysis
In 2016 the GBP/USD currency pair was quite difficult. In terms of important fundamental data, there were a lot of key decisions from the UK and United States. These include the Brexit, Trump's election victory, The Federal Reserves increasing of the interest rate and even OPEC's decision to cut oil production.
All these factors were powerful catalysts for the GBP/USD pair. To sum up, we can say that the by the results of 2016 the currency pair has lost about 2300 points.
First, the Brexit vote pulled the price down to hit quite a long channel for the GBP/USD. The further gradual strengthening of the dollar continued to reduce the price to record lows and now the price is trading at 1.2270.
For the last two and a half years the pair has been in a long-term downtrend and at the moment there are no preconditions to expect the decline to stop.
Speaking about the prospects for 2017, it should be noted that much will depend on global economic factors. The first important factor is the implementation of the OPEC agreement. If all goes according to plan and production is significantly reduced, we can expect the reduction scenario to continue.
Another important indicator will be the Fed's policy in terms of the rate increase. They promised to raise interest rates next year at least three times, which of course will continue to strengthen the dollar. However, they are unlikely to actually increase the rate three times in one year.
Speaking about short- and medium-term developments, at the moment on the graph we see a penetration of the price band downwards and a fixing of prices below the support level.
Given the general downward trend on the GBP/USD and the presence of sell signals we can confidently expect a continuation of the decrease in the medium term.
Now, there are all prerequisites for the so-called back-testing, from where the most profitable sell deals can be opened.
