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

GBP to USD Forecast Video for 22.02.23

British Pound vs US Dollar Technical Analysis

The British pound initially fell during trading on Tuesday, reaching down to the 1.20 region. However, we have seen a significant turnaround since then, as the United Kingdom released both/Manufacturing PMI figures, and Flash Services PMI figures. Both were hotter than anticipated, and therefore people are starting to bet on a potential resumption of tightening. Whether or not that will be the case remains to be seen, but it clearly has put a bit of momentum back into the British pound for the session.

The 50-Day EMA sits just above, right along with the 200-Day EMA. Both indicators are flat, suggesting consolidation more than anything else, but it should be noted that the 1.20 level underneath is crucial, and people will continue to look at it as important. Breaking down below there opens up the possibility of a move to the 1.1850 level, an area that had been tested previously. Breaking down below that swing low would be a negative turn of events, opening up the possibility of a drop down to the 1.15 level where I see quite a bit of structural support.

If the market does continue to rally, pay close attention to the shooting star from last week. If the market can break above the 1.2250 level, then it is likely to go looking to the 1.24 level, an area where we had seen a double top form. That obviously would be significant resistance, but that doesn’t mean it won’t be tested. It is an area that I think extends to the 1.25 level, so all things being equal it does make a certain amount of sense that we would see that area put up a big fight. Anything above there would be a huge victory for the British pound, although it would take a lot of effort even make that attempt from here.

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