GBP/USD Forecast – British Pound Race Is Higher After Weak US Numbers

GBP/USD Forecast Video for 31.08.23

British Pound vs US Dollar Technical Analysis

The British pound has rallied a bit during the course of the trading session on Wednesday, reaching the 50 Day EMA indicator after the ADP Nonfarm Payroll numbers came out weaker than anticipated, and of course we have GDP numbers that are shrinking. This suggests that perhaps the US economy might be struggling, and it has people believing that the Federal Reserve will turn its monetary policy around sooner rather than later. If we can break above the 1.28 level, that could send the British pound racing even higher.

However, we have to worry about the Non-Farm Payroll announcement on Friday, and that of course is a huge indicator as to where we’re going, and I suspect that if we miss the expected numbers on Friday, currently expected to be 169,000 jobs added last month, things could get ugly. Another thing you need to keep an eye on is the Core PCE numbers coming out tomorrow, because that is one of the favorites of the Federal Reserve. The 0.2% expected number will be watched closely. If we come out higher than that, there will be a lot of concerns as to whether or not the Federal Reserve sticks to its guns.

The next couple of days could be very noisy, and you need to be cautious with your position sizing. With that being said, I think the market is likely to continue seeing a lot of volatility, therefore you do need to be a bit cautious at this point. We have a lot of economic numbers coming out, and of course we have to keep in mind that most of the liquidity is still away on vacation, so I anticipate that next week will start to show the true face of the market.

We are right around the area where you would expect to see a lot of noisy behavior, so at this point in time it’s very likely that we continue to see more chop than anything else. However, by the time we get to the middle of next week, I anticipate that we will have a lot more clarity. It’s probably worth noting that we are still very much in an uptrend at this point, so I am leaning more to the upside than anything else.

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