GBP/USD Price Forecast – British Pound Gets Hammered

The British pound has pulled back a bit during the course of the trading session on Tuesday to reach towards the 1.38 level. The 1.38 level is an area that we have sliced through a couple of different times, so I do not necessarily think that the big round number would be a big deal. Underneath, we have the 1.37 level where the 200 day EMA comes into play, and it is the recent support that we had seen tested multiple times. I think we are going to continue to see that area be important, so if we were to break down below there it would be a huge deal.

GBP/USD Video 14.07.21

If we were to break down below the 1.37, then it is likely we go looking towards 1.35 level underneath. If we break down below the 1.35 handle, then it is likely that the market falls apart and we drop another 500 points. Given enough time, it is starting to look like the US dollar is about to take off, perhaps with the Federal Reserve meeting to tighten much sooner than other currencies around the world. If that is going to be the case, then it is only a matter of time before we get a breakdown.

On the other hand, if the market turns around to show dollar weakness, we might see the British pound try to take out the 50 day EMA above. The 50 day EMA above currently sits at roughly 1.3950, so I would need to see a daily close above there. If that happens, then we could go looking towards the 1.42 handle, but at this point the Forex world looks like it is starting to favor the greenback again.

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