GBP to USD Forecast – British Pound Bounces Off the 50-Day EMA

GBP to USD Forecast Video for 18.05.23

British Pound vs US Dollar Technical Analysis

The British pound initially fell during the trading session on Wednesday, as the market has tested the 50-Day EMA. The 50-Day EMA sits right around the 1.24 level, so there is a certain amount of psychology attached to that by virtue of the large, round, psychologically significant figure. The market continues to see a lot of volatility, but it does suggest that we are going to continue to see more of a shot higher.

The 1.2350 level underneath being broken could open up and move down to the 200-Day EMA, which of course a lot of people pay close attention to. In that area, the 1.22 region, the market is likely to see even more interest. If we break down below there, then the market is likely to start to change trends. Keep in mind that the British are dealing with a lot of inflation at the moment, so it does make a certain amount of sense that we would see upward pressure. However, if the market starts to fear a lot of negativity out there, then it’s natural proclivity is to run toward the US dollar, and if we start to see that the British pound won’t be immune.

All things being equal, it looks to me like we’re going to see more sideways action than anything else, with perhaps more support than resistance. However, the 1.27 level above has been very difficult to take out, and therefore if and when we finally can, this market could start to reach toward the psychologically and structurally important 1.30 level above. I would anticipate seeing a lot of noise in that area, just simply due to the fact that it is such a big figure and would make for good headlines.

Regardless, in this environment you need to be very cautious with your position sizing and understand the fact that volatility will probably end up working against you given enough time, so you need to be cautious in that sense. Because of this, the market continues to see a lot of questions being asked of it, but it certainly looks as if the buyers are being overly stubborn.

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