GBP to USD Forecast – British Pound Pulls Back After Rate Hike

GBP to USD Forecast Video for 12.05.23

British Pound vs US Dollar Technical Analysis

The British pound pulled back a bit during the trading session on Thursday before finding a little bit of support just above the 1.2550 level, an area that has been important for quite some time. Ultimately, the Bank of England raised interest rates 25 basis points during the session, but that was not enough to have the market take up to the upside, mainly because it was already expected.

If we were to break down below the 1.2550 level, that could cause a little bit of selling pressure, but at this point it looks like we are forming hammer after shooting star after hammer after shooting star and vice versa, typically meaning that the market is in the mode of where it is going to consolidate. Because of this, I think you need to be very cautious with any big position but if you are a short-term trader, you can probably go back and forth in a range-bound manner. If you are going to do this, you need to be very nimble and understand that your moves aren’t necessarily going to be big ones and that the market is probably going to continue to be choppy. Because of this, position sizing will probably be crucial, therefore it makes quite a bit of sense that we would see caution be one of the most important aspects of your trading plan.

If we can turn around and break above the 1.27 level, then it’s likely that the market goes looking toward the 1.30 level, but I would also keep an eye on the British pound across the board, as it typically will move in the same direction against most currencies, especially after these interest rate hikes and the statement coming out of the Bank of England. On the other side of the Atlantic, we have the Federal Reserve, which of course is going to remain tight for quite some time, but may not be raising rates as aggressively. They will probably continue their quantitative easing by running off their balance sheet, and therefore it’s likely that we will see quite a bit of volatility when it comes to the US dollar.

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