GBP/USD Forecast – British Pound Testing Major Resistance Area

GBP/USD Forecast Video for 12.10.23

British Pound vs US Dollar Technical Analysis

The British pound has rallied significantly during the course of the trading session on Wednesday, as we continue to see a lot of movement in the currency markets. The 1.2350 level above is a significant area of resistance where you should also keep an eye on the fact that there was significant support previously. In other words, there is a significant amount of “market memory” in this area.

Underneath, the 1.2250 level will offer short-term support, and as we get CPI numbers on Thursday, it’s likely that the markets will move quite drastically on Thursday. We recently had the so-called “death cross” in this market, and therefore it looks like the longer-term traders will be looking at this as a potential selling opportunity.

I do anticipate that this market will see a lot of noise over the next couple of days, as we look at the CPI numbers as being crucial, but we also have to look at the bond market in general. It’s not so much the currency market reaction that I’m paying the most attention to it’s the 10 year yield in the United States.

If we were to break above the 1.2350 level, then the market could test those moving averages above, but I think at this point we would need to see the CPI numbers come out much lower than anticipated. For what it is worth, during the Tuesday session we got PPI numbers coming out much stronger than anticipated, so therefore it makes a certain amount of sense that we would see everybody looking toward the CPI numbers to hopefully get some type of relief if you are bullish of the British pound.

Quite frankly, the UK has a lot of issues of inflation and perhaps an economic slowdown. The European Union is of course going to continue to be slowing down, and that will have a little bit of a drag on the UK economy as well. With all of this, I think it’s probably only a matter of time before we see enough exhaustion to start shorting, but we probably need to get through the CPI number in order to get some type of confirmation.

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