British Pound Continues to Consolidate at Lows

British Pound vs US Dollar Technical Analysis

The British pound has rallied ever so slightly during the trading session on Wednesday as we wait to see what the FOMC has to say. The British pound has been clobbered recently, and therefore it is not a huge surprise to see that we have had to have a bit of a rest after this massive move. The 1.25 level is obviously a large, round, psychologically significant figure, so therefore it should not be a huge surprise to see that there is a little bit of interest in the market here.

If we break down below the recent low made last week, then it is very likely that the British pound continues down to the 1.2250 level. On the upside, if we can break above the 1.26 level, then it is possible that the British pound goes looking to as high as 1.30, which I look at as a ceiling in the market currently. The 50 Day EMA is sitting right there, and drifting lower, suggesting that there will be a bit of technical resistance in that region.

I do anticipate that you will probably see more of a “fade the rally” type of situation going forward, which makes a certain amount of sense considering that the British pound has been so negative for so long, and of course, the Bank of England is not anywhere near as hawkish as the Federal Reserve is at the moment. Because of this, I think that we have a scenario where the market will eventually try to rip through the bottom, but it is obvious that the 1.25 level has been pretty significant support.

GBP/USD Price Forecast Video 05.05.22

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