GBP/USD Price Forecast – British Pound Continues Its Slow Drift Lower

The British pound has rallied a bit during the course of the trading session on Tuesday but has also given up gains rather quickly. That being the case, it looks as if the 50 day EMA is going to continue to be an issue for technical traders, and of course with the CPI number coming on Wednesday it does make a certain amount of sense that we would continue to see a lot of upward pressure on the greenback. If the CPI numbers come out hotter than anticipated, it will be yet another reason why people are starting to look towards the Federal Reserve to tighten monetary policy.

GBP/USD Video 11.08.21

The British pound has been one of the better performers against the greenback, but at the end of the day it is all about the US dollar right now as we can see on the US Dollar Index. Furthermore, if there is interest rates in America continue to rise on the 10 year note, that could be thought of as another reason to see the US dollar rally again. Looking at the chart, I think it is very likely that we eventually find our way down towards the 200 day EMA which coincides with the 1.37 support level. Because of this, I still like fading short-term rallies and I do believe that the downside is still the most likely of directions.

Because of this, I have no interest in buying this pair until we break above the 1.40 handle, which has been very difficult to overcome. For a while, I had been thinking that we could be forming a bullish flag, but we have dipped far too low make that move likely.

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