GBP to USD Forecast – British Pound Gaps to Kick Off the Week

GBP to USD Forecast Video for 21.03.23

British Pound vs US Dollar Technical Analysis

The British pound has gapped higher to kick off the trading session on Monday, felt to fill that gap, and then turned around the rally again in a classic bullish set up. A lot of this is predicated upon the idea that the Federal Reserve may not raise interest rates on Wednesday, but it ignores the fact that there is still significant inflation in the United States. Whether or not this ends up being true remains to be seen, but right now I think the only thing you can count on is a lot of volatility in the FX markets.

Underneath, you would have to assume that the 200-Day EMA should offer support, which currently sits just above the 1.21 handle. After that, you have the 50-Day EMA just below, and then of course the 1.20 level. On the upside, the 1.23 level has been resistance multiple times, and of course we have the double top that sits at the 1.24 level. In other words, we have plenty of noise in this general vicinity that could get this market twisted up rather quickly.

A lot of patient trading will be needed ahead, as the one thing that I think you can count on is going to be a lot of volatility and indecision. In these environments, it’s typically best to either keep your position size very small, or not to trade at all. Ultimately, I think we are trying to find some type of range bound action, but it remains to be seen whether or not we actually find it. After all, there are so many questions right now about the future that people really are not comfortable owning too much.

That might lend itself to make the US dollar a bit more attractive, but we will have to wait and see. I do think eventually the greenback picks up strength, even if the Federal Reserve doesn’t raise its interest rates. After all, they were suddenly to stop, is that really a sign of strength in the economy? There might be a short-term knee-jerk reaction that looks somewhat bullish, but ultimately it might be a bit difficult to see that take hold for any significant amount of time.

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