GBP/USD Price Forecast – British Pound Stabilizes After Rate Cuts

The British pound has gone back and forth during the trading session on Wednesday after the Bank of England cut rates by 50 basis point. By doing so, this puts the Bank of England right back in line with the rest of the central banks around the world, most notably the Federal Reserve. Keep in mind that this pair is highly sensitive to risk appetite, and as we go through the session on Wednesday, all eyes are on Washington as we tried to discern whether or not there is going to be some type of fiscal stimulus coming out of the United States. At this point, the market is going to measure risk appetite more than anything else, as it is obvious that the interest rate cuts have done nothing to dissuade people from the British pound itself.

GBP/USD Video 12.03.20

The 200 day EMA underneath the current trading action will be something that people pay close attention to, just as the 50 day EMA above the 1.30 level will cause a certain amount of resistance. At this point in time, is very likely that the market goes back and forth in this general vicinity. However, if we do get a sudden “risk off” type of move, this pair will break down rather significantly. Obviously, the exact opposite is true as well, as the US dollar will probably be driving this pair more than anything else. Expect volatility and keep your position size relatively small in these trying times.