GBP/USD Forecast – British Pound Pulls Back

GBP/USD Forecast Video for 23.11.23

British Pound vs US Dollar Technical Analysis

The British pound has pulled back just a bit during the trading session on Wednesday, as the area above the 1.25 level continues to offer resistance. That being said, the market is likely to continue to see a lot of noisy behavior, and therefore I think we’ve got a situation where the US dollar will continue to move on not only interest rate differentials and interest-rate markets, but the idea of whether or not there is a lot of “safety” out there. If traders are concerned about the overall attitude and trouble in the economy, it’s likely that the market will favor the greenback eventually.

In its present area, it’s likely that the market will continue to be very noisy, and at this point in time it’s possible that we could pull back all the way to the 200-Day EMA in a significant consolidation area. Furthermore, you need to keep in mind that Thursday is Thanksgiving in the United States, so it is going to take a lot of liquidity out of the markets. If we were to break down below the 200-Day EMA, then the market is likely to drop down to the 50-Day EMA.

On the upside, if we break above the 1.26 level, that is likely that the British pound continues to go looking to the 1.2750 level. That is a very real possibility, as traders are trying to sort out whether or not the Federal Reserve is going to change its monetary policy. I think at this point it’s a little early to suggest that, but people are suggesting that the Federal Reserve is going to cause its monetary policy, perhaps even cut rates early next year. That of course is ridiculous, but it’s also a possibility given enough time.

The question of course is: Why? If the economy is going to head into recession, the Federal Reserve will start cutting rates. However, in that environment eventually the US dollar becomes much more attractive as a safety trade, and of course bonds attract inflows as well, which of course need US dollars.

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