GBP/USD Forecast – British Pound Gives Up Early Gains

GBP/USD Forecast Video for 04.09.23

British Pound vs US Dollar Technical Analysis

The British pound has initially tried to rally during the trading session on Friday, but the 50-Day EMA has caused a bit too much in the way of technical resistance for the market to go higher. Furthermore, we also have the market bouncing around between the 50-Day EMA and the 200-Day EMA indicators. In other words, we are squeezing at the moment and trying to figure out where we’re going next. This lines up quite interestingly with Labor Day, which is a holiday on Monday in the United States. Furthermore, large institutions will start to put more money to work soon, so we could get a big move that lasts for a while.

All of that being said, if we can break above the 1.28 level, then it is likely that we could go look into the 1.30 level, possibly even the 1.3150 level which was the most recent high. On the other hand, if we were to break down below the 200-Day EMA, the British pound would be looking to the 1.2350 level, which is an area that’s been important more than once. Blowing through that to the downside would obviously be very negative, and at that point I would expect the British pound the drop down to the 1.20 level. In fact, if we do see that happen, it’s likely that the US dollar will probably be taken off against almost every other currency, so this would be a US dollar centric type of situation.

Keep in mind both of these countries are dealing with inflation, but after the jobs report, it seems like traders are starting to favor the US dollar even more, so we are definitely in an inflection point that’s going to have to be resolved very soon. Because of this, I’m actually not trading the British pound at the moment, and I’m waiting for a breakout of the levels mentioned previously to put some money to work. In the meantime, we are somewhat neutral, but it is starting to look slightly more negative over the last couple of days. That being said, markets have been volatile so you can’t put too much into it as far as reliability at the moment.

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