GBP/USD Price Forecast – British Pound Drops to Kick Off Week

GBP/USD Forecast Video for 06.02.24

British Pound vs US Dollar Technical Analysis

The British pound has fallen a bit against the US dollar during the early hours on Monday, as we have seen a little bit of trouble in the markets in general, as far as trying to sell off the greenback. Remember, everybody wanted to do that, but recently we’ve had a couple of different things come across the wires.

To begin with, we had the Federal Reserve suggest that perhaps they were not as dovish as people thought. And then of course, we had the jobs number on Friday that had everybody talking about how the US economy is still running hot. So with that, it’s not a huge surprise to see that perhaps the British Pound is going to struggle against the US dollar. Underneath, we have the 200 day EMA and the 1.25 level coming into the picture, which of course will attract a certain amount of attention. This is an area that I think a lot of traders will be watching closely.

Breaking down below that would probably accelerate selling at that point, and it would be interesting to see how the market behaved in that move on the upside. If we could recapture the 50 day EMA, that would be bullish. Indeed, it would be extraordinarily bullish. If we could find our way back above the 1.2750 level, that is where we had seen significant resistance during that consolidation over the last several weeks.

Speaking of that consolidation, it does look like the market’s trying to change its mind. So pay close attention to the 200 day EMA because that will kick off a lot of algos and of course, CTAs, perhaps trading to the downside. If we break down below there, it’s probably a positive US dollar move across the board. It probably won’t just be against the pound. So be aware of that as well, it could be a signal for other currency pairs in the future. Also, it is worth nothing that the USD could get a bit of a safety bid in this environment as well, so that is something that could come into the picture at any given moment.

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