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GBP/USD Forecast – British Pound Attempts to Rally

By:
Christopher Lewis
Published: Sep 19, 2023, 14:16 GMT+00:00

The British pound has attempted to rally during the trading session on Tuesday, as we continue to see the market try to sort out what’s going to happen next with the Federal Reserve on deck.

British Pound, FX Empire

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GBP/USD Forecast Video for 20.09.23

British Pound vs US Dollar Technical Analysis

The British pound has shown itself to be a bit resilient over the last couple of trading sessions, as the 1.2350 level is an area that looks like it is going to offer a little bit of support, but whether or not it actually sticks remains to be seen. After all, this is a market that I think given enough time will have to decide whether or not it is going to break out, and if we do get below that 1.2350 level, it could be very brutal on the British pound. At that point, I would look for the market to go reaching toward the 1.20 level, which is the next major barrier.

That being said, keep in mind that the FOMC meeting is on Wednesday, and a lot of traders will probably be somewhat cautious heading into that. With that being the case, I think that you’ve got a situation where the market participants will continue to be very cautious, recognizing that although an interest rate hike is very unlikely, most of what the market will be paying attention to is the fact that Jerome Powell has a speech afterwards that could really rock markets. Unfortunately, the trading public is waiting around to see whether or not there is weak monetary statements coming out of places like the Fed, due to the fact that the last 15 years have been about trying to get cheap liquidity.

At the same time, the Bank of England has a lot of issues to worry about in the European theater, and therefore we could see a bit of a recession coming to Britain soon. In fact, it’s very likely that America will eventually follow suit, but right now it seems as if America is holding up better than many of the other major players out there. In that environment, one would have to favor the US dollar, but that doesn’t mean that we can have a short-term rally. I look at the 200-Day EMA, currently sitting just below the 1.25 level as a short-term “ceiling”, while the 1.2350 level is short-term “floor in the market.”

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

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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