GBP/USD Forecast – British Pound Continues to Recover

GBP/USD Forecast Video for 07.08.23

British Pound vs US Dollar Technical Analysis

The British pound has rallied a bit during the trading session on Friday, as we have seen quite a bit of a recovery over the last 48 hours. The jobs number coming in cooler than anticipated of course makes quite a bit of sense that we would see the US dollar suffer at the hands of the British pound, as the market has seen the Bank of England raise interest rates recently. That doesn’t necessarily mean that we are going to go straight up in the air, but it does make a certain amount of sense that the British pound continues to have quite a bit of lively behavior against the US dollar.

Underneath, the 1.2650 level is an area that is significant support, right around with the uptrend line. All things being equal, this is a situation where we see a lot of noise, but I do think that eventually we try to go to the 1.30 level above, as it is a large, round, psychologically significant figure. There is nothing on this chart that suggests that we are going to pull back, and the fact that we ended up forming a bit of a hammer on the Thursday session suggests the traders were already positioning themselves for a move to the upside.

That being said, if we were to break out from here then a move below the trendline opens up the possibility of a move down to the 200-Day Moving Average, possibly the 1.2350 level after that. That would obviously be a very negative turn of events for the British pound, and therefore I think you would probably have quite a bit of selling pressure jump into the market as longs would have to cover their positions, and then of course people would probably be running to the US dollar for safety in some type of panic move. I don’t expect to see that happen in the short term, and certainly from the technical analysis standpoint, it doesn’t make any sense that we would see any selling pressure of significance in the short term. However, the reality is that we could get a sudden shift in the market so you should always keep your position size reasonable.

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