GBP/USD Forecast – The British Pound Continues to Power Higher

GBP/USD Forecast Video for 10.07.23

British Pound vs US Dollar Technical Analysis

The British pound has rallied rather significantly during the trading session on Friday, as the Non-Farm Payroll announcement came out lighter than anticipated. Because of this, the market is likely to continue seeing a lot of noisy behavior, as suddenly traders are trying to bet that the Federal Reserve will loosen monetary policy, because everything is an extreme these days.

That being said, the reality is that the Fed is nowhere near loosening monetary policy, and one data point is not can it change everything. However, the drama merchants in the trading world will continue to overreact to every piece of information that they get. This is exactly what we have seen during the Friday session, but it’s probably worth noting that we were already in an uptrend, so it’s not a stretch to think that we could continue. Whether or not anything has truly changed remains to be to be seen.

Underneath, the 1.2650 level is an area that I think you will see a certain amount of support, and therefore any pullback probably sees buyers in that area. This is especially true as the 50-Day EMA is rushing toward that area. If we can break down below there, then it is likely that we could go much lower, perhaps reaching down to the 200-Day EMA, near the 1.2350 level. The 1.2350 level will continue to be important, and therefore it’s likely that we will have a bit of a reaction to that area.

With that being the case, I think you’ve got a situation where we probably end up seeing a lot of volatility, but even if we do break to the upside I think the move is probably somewhat limited, perhaps as we try to get to the 1.30 level, the next large, round, psychologically significant figure. I think a lot of what we are about to see is more of a “buy on the dips” type of mentality, and therefore I think short-term traders will continue to push higher, but I don’t necessarily think that we are free and clear to suddenly take off to the upside for a huge move.

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