GBP/USD Forecast – Pound Continues to Struggle Against the Greenback
GBP/USD Forecast Video for 19.09.23
British Pound vs US Dollar Technical Analysis
The British pound‘s most recent trading session took place on Monday, and it saw an attempt at a rally, only to witness a retracement, which underscores the prevailing sense of uncertainty in the market. Looking at the chart, it’s evident that the currency is in a rather delicate position, hinting at a potential move towards the 1.2350 level, a point that previously played a crucial role as significant support. If this level fails to hold, it opens the door to further decline, with the possibility of heading towards the 1.20 level.
It’s important to note that a substantial rally doesn’t appear imminent at this time. However, it’s crucial to closely monitor any potential break above the 1.25 level, as such a development could signal a possible reversal for this currency pair. Notably, the US dollar is widely regarded as a safe-haven currency, and during times of uncertainty, it tends to attract investors seeking safety. Moreover, the increase in short-term interest rates has bolstered the appeal of the US dollar compared to other currencies.
However, all eyes are on the upcoming interest rate decision, especially in light of the fact that Fed Fund Futures are suggesting a mere 3% chance of an interest rate hike. This situation places significant focus on the statements and actions of Jerome Powell, as the Federal Reserve is expected to continue raising rates, given the substantial 28% increase in oil prices this year, which carries inflationary implications. Yet, there still exists a considerable gap between the Federal Reserve’s current position and its ultimate goal.
Should the 1.23 level give way, it has the potential to trigger a downward cascade, possibly leading to the 1.20 level, which serves as a robust support level. The British pound is grappling with rather modest performance, mainly influenced by the slowdown in the British economy and concerns surrounding a potential recession in the European Union, which has a significant impact on the UK’s economic prospects.
In summary, the British pound finds itself facing a landscape marked by uncertainty and fragility in the wake of its recent trading behavior on Monday. The 1.2350 level holds pivotal importance, and any breach could set the stage for further declines. While a significant rally may not be on the immediate horizon, a break above 1.25 should be watched closely, considering the US dollar’s status as a safe-haven currency and the evolving interest rate landscape. Ultimately, external factors, including the economic situation within the European Union, continue to exert significant influence on the performance of the British pound. This underscores the need for caution in navigating this complex currency landscape.
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