GBP to USD Forecast – British Pound Approaches 1.25

GBP to USD Forecast Video for 14.12.22

British Pound vs US Dollar Technical Analysis

The British pound has been rather strong during the trading session on Tuesday and got a little bit more of a boost as the CPI figures in the United States came in cooler than anticipated. Because of this, there are already people out there suggesting that perhaps the Federal Reserve is going to have to slow down its rate hike cycle, but the biggest issue that you will have with this particular line of thinking is that the Federal Reserve has a meeting on Wednesday. There is a high probability that Jerome Powell will come out and say something to try to cool the markets off. In that scenario, the US dollar will probably make a bit of a recovery.

The hardest part of analysis at this point is going to be to determine how the market reacts to what he says. It’s not going to be about the rate hike, unless of course the Federal Reserve decides to do 75 basis points, it’s going to be about perception. Right now, the market looks as if it believes that the US dollar is going to fall apart. That being said, if he really decides to do so, he can in this right now.

Jerome Powell has a long history of messing up when it comes to speeches, so it’ll be interesting to see how he plays this. Not to be outdone, the ECB meets on Thursday, and has an announcement as well. While this doesn’t necessarily directly influence the British pound, it does have a bit of a knock on effect over here as well. The volatility after the announcement was pretty extreme because the CPI came in lighter than anticipated. However, this is about forward guidance and CPI year-over-year is still 7.1% in the United States, which means that loose monetary policy is a pipe dream.

For a look at all of today’s economic events, check out our economic calendar.