GBP/USD Forecast: British Pound Continues to Look Lost
This market will continue to be very noisy in general, but it looks to me like it is still in a relatively strong downtrend.
This is because the British economy is suffering at the hands of inflation, but so is everybody else. At this point, people are starting to pay close attention to the interest rate differential between the two economies, which favors the United States, but it has narrowed quite a bit now that we have seen the BOE act. That being said, we have the jobs number coming out on Friday, and that will be the next major catalyst.
If we were to break down below the bottom of the candlestick, we are almost certainly going to see this market test the 1.20 level. Breaking down below that level then opens up the possibility of a plunge down to the 1.18 level. If we can break it down below there, then the market more likely than not will drop to the 1.16 level. Anything below there becomes a wipeout for the British pound. It is likely that you would see some type of catastrophic situation where the US dollar strengthens against almost everything when you have that type of move. Ultimately, this is a market that I think will continue to be very noisy in general, but it looks to me like you are still in a relatively strong downtrend. In fact, it’s not until we break above the 1.25 level that I think the entire trend has changed, something that will take quite a bit of effort to make happen.
Pay close attention to how this market closes on Friday because it could give you an idea as to how people feel about the British pound and the US dollar as holding a currency over the weekend is a completely different situation altogether. Because of this, watch what the market does, not what pundits say.
Ready to trade our daily Forex analysis? We’ve made a list of the best brokers to trade Forex worth using.