GBP/USD Price Forecast – British Pound Rallies After Rate Hike

The British pound has skyrocketed during the trading session on Thursday, as the Bank of England has decided to raise interest rates. That being said, the market is likely to continue seeing somewhat of an upward move, due to the fact that the interest rate hike was not necessarily forecasted by everyone. That being said, it is still just 0.25%, so this is more or less going to be thought of as a “repricing” of sterling as the two central banks have essentially the same interest rate. That being said, it now becomes a race as to which central bank will become tighter.

GBP/USD Video 17.12.21

Nonetheless, there is still a significant amount of resistance above and at this point I think there is probably much more of a likelihood of exhaustion in the short term than anything else. As we approach the 1.34 handle, I am going to start paying attention to see whether or not we get some type of selloff. Above there, then we have to pay close attention to the 1.35 handle, which is an area where we would see a lot of selling pressure as well.

All things being equal, this is a market that I think will continue to see a lot of interest, but quite frankly we are still very much in a longer-term pullback. I think at this point it is probably going to eventually fizzle out as we head towards the end of the year. The real battle will probably be in early January. Having said that, if we do break above the 1.35 handle, then I am willing to go on the other direction and start buying for a bigger move. While this has been a great start, the trend has not changed.

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