GBP/USD Forecast – British Pound Sells Off

GBP/USD Forecast Video for 18.10.23

British Pound vs US Dollar Technical Analysis

The British pound has pulled back a bit during the trading session on Tuesday, as we continue to see a lot of consolidation in this area. The 1.21 level underneath should offer support, just as the 1.2250 level above offers a significant amount of resistance. I think we continue to see a lot of noise, with the retail sales in the United States coming out as strong as they have during the day, which has strengthened the US dollar.

Ultimately, the market is also forming a massive bearish flag, so it does suggest that we are going to go lower over the longer term. At this point, I like the idea of shortening this market every time there’s a rally that fails, and eventually the market should go down to the 1.20 level. The 1.20 level of course is a large, round, psychologically significant figure, and if we break down below there, it’s likely that we could go down to the 1.1850 level underneath. The 1.1850 level is of course an area that’s been important more than once, and therefore I think we will have to pay close attention to it.

If we do break to the upside, the 1.2350 level offers a significant amount of resistance, and it’s also where the 50-Day EMA is starting to head toward. That of course is an area that I think will offer quite a bit of noise and it will offer a barrier that’s almost impossible to get through unless something changes. Ultimately, the US dollar is going to continue to strengthen due to the fact that inflation is running so hot in that country, and of course the idea of higher interest rates is still something that the market will have to deal with.

I like fading rallies to show signs of exhaustion on short-term charts, and I do think that eventually we break down. I have no interest in buying this pair, but if we do break above the 1.24 level, then I would have to reconsider everything. Until then, this is a market that I look at with bearish intentions and have no interest in trying to fight what has been such a vicious downtrend.

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