GBP/USD Forecast – British Pound Pulled Back

GBP/USD Forecast Video for 11.07.23

British Pound vs US Dollar Technical Analysis

The British pound has pulled back just a bit during the trading session on Monday, as it looks like we are trying to form a bit of a double top. The 1.2650 level is an area underneath it could offer quite a bit of support, and of course we can also have a little bit of support due to the 50-Day EMA at the same time. On the other hand, if the market were to break above the 1.2850 level, then it’s possibly a sign that we are ready to go to the 1.30 level above, which of course is a large, round, psychologically significant figure, and an area that’s been important in the past.

Keep in mind that the Bank of England has further to go fighting inflation, while people are starting to bet that the Federal Reserve only has 50 more basis points worth of tightening coming. All things being equal, this is a market that continues to be very noisy, and therefore it’s not a huge surprise to see a little bit of a pullback. Ultimately, I do think that people will look for some type of value on a dip, and therefore it’s worth noting that a lot of traders will probably be looking to take advantage of cheap British pounds.

Even if we break down below the 50-Day EMA, there is still a significant amount of noise underneath it that could come into play to offer support, extending all the way down to the 200-Day EMA, which sits at the structurally important 1.2350 level. This is an area that defines the trend, so therefore as long as we can stay above there, we should be in decent shape. If we were to break down below there, then it’s likely that the British pound will really start to break down, perhaps opening up the possibility of a bullish run for the US dollar. Keep in mind that the risk appetite is still in a state of flux, so that will continue to cause a bit of volatility in this currency pair, as well as many others.

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