GBP/USD Forecast – British Pound Attempting to Recover

GBP/USD Forecast Video for 31.10.23

British Pound vs US Dollar Technical Analysis

The British pound initially fell during the early hours on Friday, but then turned around to show signs of life again. By doing so, it looks as if the market is trying to sort out whether or not it can continue to drop, or if it needs to see some type of recovery before the sellers come back. At this point, we are probably going to see a short-term bounce, but that bounce is definitely something that I am more than willing to start selling into.

If we were to break down below the hammer from the trading session on Thursday, then I think it opens up a bit of a floodgate, and therefore it allows the market to go down to the 1.20 level. The 1.20 level is an area that will attract a certain amount of tension due to the fact that it is a large, round, psychologically significant figure, but it is much less impactful than the 1.1850 level underneath there, where we had seen a couple of big moves previously. All things being equal, this is a market that I think continues to consolidate overall, but it certainly has a very ugly negative tone to it over the longer term.

After all, the United States dollar represents higher interest rates and of course a safety trade in a market that has a lot of geopolitical worries at the moment. While the British pound certainly isn’t considered to be an overly “risky currency”, it is further out on the wrist spectrum than the US dollar. After all, traders will more likely than not continue to run toward those higher yields in the US bond market, and therefore I think it’s only a matter of time before you see an exhaustion candle that you can start selling.

Quite frankly, I’m just looking for a long wick to the upside that I can take advantage of. Until something changes at the Federal Reserve, I just don’t see a situation where you want to short the US dollar. Yes, perhaps we are at an extreme level, but at this point the market still favors the greenback.

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