Sterling Continues to Break Down

British Pound vs US Dollar Technical Analysis

The British pound has broken down yet again against the US dollar on Tuesday as we continue to see the greenback act like a wrecking ball against almost everything out there. Because of this, the market will continue to dig down to the 1.26 level, possibly the 1.25 level over the longer term. Ultimately, this is a situation that will continue to favor the downside, but sooner or later we should get some type of bounce, but that bounce should be a nice selling opportunity given enough time.

If we break it down below the 1.25 level, it will be a disaster for the British pound, and will more than likely kick off some type of massive “risk-off” type of contagion. While I do not necessarily think that the British pound itself will be the reason, it would be a symptom of everything else going on. Ultimately, the breakdown below the 1.30 level was a major event, and a bit of follow-through makes quite a bit of sense.

With the concerns that we have seen around the world when it comes to global growth, the reality is that we continue to have a lot of fear. As long as that is going to be the case, the market is more than likely going to favor not only the US dollar but perhaps get some of those “real yields” that add life to a currency. At this point, the Bank of England has also stated that the bond buyback program kicking off is a bit premature. Because of this, the British pound has been sold off quite drastically as of late. With that in mind, I believe we will continue to see downward pressure over the longer term.

GBP/USD Price Forecast Video 27.04.22

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