GBP/USD Forecast – British Pound Drops on Tuesday

GBP/USD Forecast Video for 08.11.23

British Pound vs US Dollar Technical Analysis

The British pound has fallen rather hard during the trading session on Tuesday, as we have broken below the 50-Day EMA. Ultimately, this is a market that I think is trying to stay within the bearish flag that we have been in recently. Ultimately, I do think that we have much further to go to the downside, but the short term rally could happen from time to time. The 200-Day EMA above offered a massive barrier, especially as the Monday candlestick ended up being a bit of a shooting star.

If we were to turn around and take out the top of the shooting star for Monday, that would be a very bullish sign, even more so now that we have seen a bit of follow-through during the Tuesday session. In general, this is a market that I think continues to favor the US dollar, not only due to higher interest rates, but the fact that there are a lot of recessions coming around the world, not the least of which will be the European Union, which will have a direct effect on the United Kingdom, as the 2 do so much trading back and forth.

Ultimately, I do think that we get a lot of volatility, but there is a lot out there that could drive money into the US dollar in the short term. The geopolitical situation alone is probably going to continue to favor the US dollar, and then of course if the entire world is going into some type of recession, bonds become much more attractive which of course use the US dollar as a denomination. Ultimately, this is a market that they don’t have an interest in buying until we clear the shooting star, even though at one point it certainly looked like the British pound was going to take off to the upside, it looks as if it has failed and I do think that we are one bad headline away from seeing this market drop rather hard. With this, I like the idea of taking advantage of opportunity on short-term rallies, to pick up “cheap US dollars” going forward.

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