GBP to USD Forecast – British Pound Continues to Undulate

GBP to USD Forecast Video for 03.05.23

British Pound vs US Dollar Technical Analysis

The British pound has gone back and forth during trading on Tuesday, as we continue to see a lot of noisy behavior. Alternatively, the market has been trading between the 1.2550 level above, and the 1.2350 level underneath. Alternatively, this is a scenario where I think you see a lot of uncertainty, and therefore you need to be very cautious about getting to overly exposed to the market. This will be especially true considering that we have a couple of major central-bank announcements over the next couple of days, although the Bank of England is not one of them.

On Wednesday, we have the Federal Reserve releasing an interest rate announcement, and of course the press conference that follows. On Thursday, the European Central Bank does the same. Because of this, it’s very likely that the US dollar will be all over the place, so it’ll be interesting to see how that behaves in this pair.

Keep in mind that the market has been very strong for some time, so it’s not a huge surprise to think that the market may be very volatile and in a small range in order to work off some of the excess froth. It’s obvious that there is a lot of resistance above, if we can break above the recent highs, we could go to the 1.2750 level, possibly even the 1.30 level after that.

On the downside, if we were to break down below the 1.2350 level, and extensively the 50-Day EMA, the market could very well find itself dropping down to the 200-Day EMA which currently sits at the 1.22 level and is rising. That’s obviously a very widely followed indicator, and it will of course have a major influence on what the overall trend behaves like. Beyond that, we also have to keep an eye on inflation in the United Kingdom, as it has been one of the hottest running economies in Western Europe. As long as that’s the case, the British pound itself will more likely than not continue to find inflows. Having said that, if the market were to turn back around, it could be an overall situation of US dollar strength across the board.

For a look at all of today’s economic events, check out our economic calendar.