GBP to USD Forecast – British Pound Looking to Stay Within Range

GBP to USD Forecast Video for 28.02.23

British Pound vs US Dollar Technical Analysis

The British pound has rallied a bit during the trading session on Monday, suggesting that we are going to try to break above the 1.20 level again. This is a large, round, psychologically significant figure, so it’s not a huge surprise to see that the market continues to struggle with this idea. The 1.21 level features the 50-Day EMA and the 200-Day EMA indicators, which of course a lot of people pay close attention to. Because of this, the market is more likely than not going to continue to be very noisy but seems to have a short-term ceiling due to those indicators. Any rally at this point in time more likely than not should be sold into, on the first signs of exhaustion.

On the other hand, if we break down below the hammer from last week, it’s very likely that we could go looking to the 1.18 level, an area that really looks supported a while back, and it’s also an area we had launched from to enter the consolidation area that we had been in for a while. If we break down below that level, then it’s like a trapdoor opening, allowing the British pound to fall quite drastically. It does make a certain amount of sense, due to the fact that the US dollar continues to strengthen across the board, so there’s really no reason to think that the British pound will be any different.

Granted, the Bank of England has recently had to deal with a lot of inflation and therefore monetary policy may remain tight longer than anticipated, but at the same time you can certainly take that same attitude towards the Federal Reserve, and of course the Federal Reserve will get what it wants given enough time.

It seems traders are just now starting to come to grips with the idea that the Federal Reserve is going to remain “tighter for longer”, as inflation simply is going nowhere in the United States. There’s a high demand for US dollars currently, as interest rates around the world continue to climb, and world governments have to pay back US dollar denominated debt. I like fading rallies at the first signs of exhaustion.

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