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GBP/USD Forecast – British Pound Recovers After Initial Selloff

By:
Christopher Lewis
Published: Oct 26, 2023, 13:46 GMT+00:00

The British pound initially sold off during the trading session on Thursday but has turned around since then to show signs of hesitation to continue selling off.

British Pound, FX Empire

In this article:

GBP/USD Forecast Video for 27.10.23

British Pound vs US Dollar Technical Analysis

The British pound has fallen significantly during the early hours on Thursday, only to turn around and show signs of life again. By doing so, the market is likely to continue to see a lot of volatility, and therefore I think you continue to see a lot of noisy behavior, and a rally at this point in time will more likely than not attract sellers, as the market heads back into the bearish flag. The market has been in a downtrend for some time, and therefore you need to look at it through that prism.

At the end of the day, I think this is a market that will eventually fall right along with other USD denominated currency pairs, but the British pound does seem to be putting up more of a fight than other ones such as the euro or the Swiss franc. With this being the case, it might actually signal a trade in the EUR/GBP pair, or even the GBP/CHF pair. However, the US dollar continues to remain dominant, and with the higher interest rates in the United States, I think that continues to be the case going forward.

Geopolitical concerns continue to have people looking toward the greenback for safety, and then of course the swap of favoring the greenback helps as well. Underneath, the 1.20 level is an area where a lot of people will be paying attention to, and a breakdown below the 1.20 level opens up the possibility of a move down to the 1.1850 level, which is a major swing low in the past, therefore should offer quite a bit of support. Breaking down below that level then opens up a much bigger move to the downside. In that scenario, we really start to see some type of meltdown.

On the upside, the 50-Day EMA hangs about the 1.2350 level, an area that has been important multiple times. A break above that level could change the trend, but right now we are nowhere near doing that, and I think you continue to fade rallies going forward in this environment as the greenback continues to be favored against almost everything.

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

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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