GBP/USD Forecast – British Pound Bounces After Initial Selloff

GBP/USD Forecast Video for 20.10.23

British Pound vs US Dollar Technical Analysis

The British pound has fallen a bit during the trading session on Thursday in the early hours, but has turned right back around to show signs of life again. Ultimately, I think the market just is not quite ready to break down, but clearly we have a lot of downward pressure. I have no interest in buying this market, at least not until we break out of what I believe is a major bearish flag pattern. The 50-Day EMA sits just above the 1.2350 level, and is falling rather drastically. Speaking of the 1.2350 level, that’s an area that has previously been very difficult to deal with and I think it is the short term “ceiling in the market” that a lot of people will be paying attention to.

If we break down below the bottom of the candlestick for the trading session on Thursday, then it opens up a possible move down to the 1.20 level, which of course is a large, round, psychologically significant figure. If we break down below there, then the 1.1850 level underneath would be a significant target, and perhaps a “floor the market” going forward. It’s an area that’s been important more than once, therefore I think we have a lot of situational awareness of a move that could continue from here. Quite frankly, it’s not until we break above the 1.2350 level that I would even consider getting long of the British pound, as there are so many issues when it comes to the European Union that are almost undoubtedly going to drag the UK down with it.

Furthermore, in a geopolitically charged time like we have now, it makes quite a bit of sense that the US dollar is attractive, as it is a “safety currency.” Ultimately, I do think that eventually we have plenty of noise out there that will continue to cause volatility, but it’s obvious to me that we are very much in a downtrend at this point. As things stand right now, I do believe that the US dollar continues to strengthen not only against the British pound, but multiple other currencies as well.

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