GBP/USD Forecast: Continues to Sell Off – 22 September 2022
The market now looks as if it’s ready to continue dropping, and by target of 1.1250 was in fact hit during the day.
The GBP/USD now looks as if it’s ready to continue dropping, and by target of 1.1250 was in fact hit during the day. That does not necessarily mean that we are not going lower, and I think Jerome Powell reiterated that we are. However, it’s also worth noting that the market has been extraordinarily difficult to deal with, at least in other areas. The British pound itself has not been too difficult, it’s been a matter of being short of this market the entire time. Whether or not that continues to be the case remains to be seen, but I don’t see anything keeping that from happening.
Rallies now will have a ceiling around the 1.15 level, which is a large, round, psychologically significant figure. Any playing around in that area that shows signs of exhaustion will be sold into quite rapidly as far as I can see. I do think that it is probably only a matter of time before we will continue to see sellers come in and take advantage of “cheap US dollars” on those short-term rallies, as the interest rate differential between the United States and Great Britain should continue to expand.
In fact, it’s worth noting that the British government has now been reduced to having to protect its businesses from rising energy costs. They are essentially putting a cap on energy costs for businesses to keep them from going under. This is not a recipe for an economy that’s going to suddenly take off. I do believe that it is probably only a matter of time before the British pound starts to suggest that perhaps parity is possible there, not just in the Euro. It wasn’t that long ago something like that would be unthinkable.
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