GBP/USD Price Forecast – British Pound Reaching Towards 200 Day EMA

The British pound has broken down significantly during the course of the session on Monday to kick off the week with a very negative tilt. I do not necessarily think that this was a particularly in time British pound type of move, because the US dollar is picking up strength everywhere with yields dropping in the bond market. That being said, the market is likely to continue to demand US dollars, and at this point in time the British pound looks very vulnerable, right along with so many other currencies.

GBP/USD Video 20.07.21

The market breaking below the 200 day EMA opens up the possibility of the British pound reaching towards the 1.35 handle, and at this point in time I do believe that happens sooner or later. The concerns about the Delta variant continue to pile up, and of course global growth slowing down is also something that is front and center for the moment, so it will be interesting to see whether or not that plays out.

On the other hand, if we wipe out the losses from the candlestick on Monday, it is very likely that we will return to the previous consolidation area, meaning that we could rise towards the 1.350 level. Nonetheless, it certainly looks as if a lot of people are running towards the greenback in general, so I do think that will be the main driver, therefore I remain bearish on this market, but I also recognize that the British pound has been one of the more resilient currencies against the greenback for a while, so this is probably one of my least favorite shorts at the moment.

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