GBP/USD Price Forecast – The British Pound Gives Up Below 1.26
British Pound vs US Dollar Technical Analysis
The British pound rallied early during the trading session on Monday, reaching the 1.26 level. At this point, the market is likely to continue to see sellers jump in, as this is a major resistance barrier. Furthermore, there are concerns around the world when it comes to disinflation and risk appetite, and that will have a major impact on the greenback. The market has been in a downtrend for quite some time, so it does make quite a bit of sense that we will see sellers step in.
The 50 Day EMA is near the 1.2750 level and dropping, which will be dynamic resistance as well. Quite frankly, I just do not see a situation where I would be shorting the US dollar, even if interest rates start to drop. Quite frankly, the market is likely to see more negativity out there, and therefore people will be looking to the US dollar for safety. In fact, if rates dropped, it means that people are stepping in and buying bonds, a sign of negativity.
Furthermore, the British pound has to worry about the Bank of England being soft, and of course the likelihood of stagflation in the UK. Nonetheless, the only thing that you have to look at is the possibility of continued strength. If we do break down, it is likely that we go looking to reach down to the 1.22 handle. Breaking down below that level opens up a move to the 1.20 handle, something that I could see happening over the longer term. This bounce makes a certain amount of sense though because the market has been going straight down for quite some time.
GBP/USD Price Forecast Video 24.05.22
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