GBP/USD, GBP/JPY and GBP/CHF Forecast – British Pound Struggling on Friday

GBP/USD Technical Analysis

The British pound initially tried to rally against the US dollar, but it looks like there is a significant amount of noise right around the 1.35 level that will keep this market struggling. Short-term rallies get sold out from everything I can see here and given enough time, I do think that we could break down towards the 200-day EMA.

I don’t think this is a situation where the British pound’s going to collapse, but you have to start to think about pricing in the idea that the Bank of England is also cutting rates—it’s not just the Federal Reserve. And if that’s the case, then maybe the British pound was priced a little too high to begin with.

What would be bearish, and extraordinarily so, is if we break down below 1.3340. That would wipe out the entire impulsive move that started in the middle of January—a complete round trip, which is generally not a good sign. As things stand right now, it looks like 1.36 is resistance.

GBP/JPY Technical Analysis

The British pound is struggling against the Japanese yen, although this is a place where it may do okay over the longer term. The interest rate differential still favors the British pound even if they do cut 1 or 2 times and it’s not even close.

We are hovering around the 50-day EMA and by extension the 210-yen level. This is an area that could provide support, although the previous range drops all the way down to the 207-yen level. So, we’ll see if that holds up. A rally from here could send this market looking towards 212 yen. Remember, you get paid at the end of every day to hold it.

GBP/CHF Technical Analysis

Speaking of getting paid at the end of every day to hold a pair, the British pound against the Swiss franc is breaking down and we are below the 1.04 level. This is getting interesting because the Swiss National Bank has lost its sense of humor more than 1 time with a strengthening Swiss franc.

Now admittedly, the British pound is not the first currency that they’re concerned about—that would be the Euro—but this is worth watching. And if you are interested in trading this market, perhaps trying to find cheap British pounds, watch the Euro against the Swiss franc. If it starts to move to the upside, then you could look at that as a potential tertiary indicator.

If this market breaks down too much further, I think it does become a bit of an issue, but again, I think the trigger will be over in the Euro. A drop from here could send the pound down to 1.02 against the Swiss franc. A bounce will find trouble at 1.05.