GBP/USD Price Forecast – British Pound Continues to Grind in Downward Channel

On Friday, the British pound has rallied ever so slightly, but remains in a small descending channel. The market has offered a bit of negativity as of late, with the 50 day EMA offering significant resistance above it. The 200 day EMA is sitting at the 1.37 level, offering a potential ‘floor in the market’ going forward, as the longer-term trading public tends to pay close attention to it for directionality. This should be hard to break though, but below there we would have a potential move down to the 1.35 handle, an area that will be supportive as well based upon history.

GBP/USD Video 16.08.21

Most of what is going on here though has to do with the US dollar more than anything else. The greenback controls most of the Forex trading volume, so therefore you have to pay attention to the 10 year yield, as the 10 year yield note rates will influence on what happens to the US dollar. As they rise, it makes the greenback much more attractive than other currencies, even though the Bank of England is going to be tapering, although I do not know anything along the lines of a timeline at this point.

Furthermore, there are liquidity issues out there believe it or not, even though the narrative is that the Federal Reserve is printing money. They are not, because money is not created until somebody takes out a loan, and the M2 is anemic at best. With that being the case, there should not be a massive selling of the greenback despite some of the narrative that you could hear.

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