GBP/USD Forecast – British Pound Soars on Wednesday

GBP/USD Forecast Video for 05.10.23

British Pound vs US Dollar Technical Analysis

The British pound has rallied rather significantly against the US dollar during trading on Wednesday, as it looks like we are seeing a bit of profit-taking. After all, this pair has been straight down for some time, so it does make sense that we would see market participants trying to take some profit. Furthermore, we also have the jobs number coming on Friday and the later that we get into this week, the more likely we are to see people try to flatten out the positions, and it’s obvious that a huge portion of the market is short of the British pound at this point. Because of this, I would be remiss to think that we are just simply going to continue to fall.

At this point, I think the 1.2250 area could offer a bit of resistance as we have seen a shooting star form there, and then eventually the 1.2350 level after that which has a lot of market memory attached to it. Furthermore, we also have the so-called “death cross” that had formed previously, which is when the 50-Day EMA crosses below the 200-Day EMA, an indicator that a lot of longer-term traders will pay close attention to as it suggests a longer term downtrend. Whether or not that actually means anything remains to be seen, but it does tend to attract a lot of headlines.

Keep in mind that the most likely of scenarios between now and Non-Farm Payroll numbers will end up being very influential, so I anticipate that the upside is somewhat limited, and that eventually we will reenter a consolidation phase. With that being the case, I like the idea of just simply sitting on the sidelines and closing out any shorts that have already been placed. If we can break above the 1.2350 level, then we have a completely different discussion ahead, but right now that doesn’t look very likely. I still believe that we will end up going to the 1.1850 level over the longer term. That doesn’t mean we get there overnight, so keep that in mind and recognize that a little bit of patience may go a long way in this general vicinity.

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