GBP/USD Forecast – British Pound Gives Up Early Gains

GBP/USD Forecast Video for 01.11.23

British Pound vs US Dollar Technical Analysis

The British pound initially took off to the upside during the trading session on Tuesday but gave back gains to show signs of weakness yet again. At this point, we are toward the bottom of the bearish flat, and it could have people looking for a major breakdown coming. With this, I think it’s probably only a matter of time before we would see some type of drop from here. After all, the United States dollar will continue to offer a bit of a safe haven trade for those worried about geopolitical events, and of course the interest rate differential between most central banks and the Federal Reserve continues to favor the US dollar.

Underneath, the 1.20 level offers a significant amount of support from a psychological and structural standpoint, so if we were to break down below there, then I think the market is likely to see a lot of downward pressure and perhaps the British pound down to the 1.1850 level. In the meantime, short-term rallies continue to get sold into, just as we have seen in the middle of the day, and the 50-Day EMA hanging around the 1.23 level is right at the top of the bearish flag as well, which is also an area that I think often will offer selling pressure.

If we could break above the 200-Day EMA, then you can make an argument that perhaps we are ready to go higher, but right now I think you continue to fade rallies going forward. In fact, each successive high gets lower, suggesting that we are going to break down given enough time. With this, I suggest that the market is likely to continue to see volatility, but furthermore the geopolitical headlines out there will continue to favor the greenback over most currencies, with the British pound not being any different. The UK also has to worry about the European Union dragging it into a recession, which is something that I think will be the story of this winter with Germany, Austria, and several other large economies already there. With this, I continue to look at short-term rallies as opportunities to pick up “cheap US dollars.”

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