GBP/USD Price Forecast – British Pound Continues to Look Strong

The British pound has gone back and forth during the trading session on Monday, trying to regain its footing to continue the move that we had seen on Friday. Quite frankly, the US dollar looks as if it is on its back foot, so it would make quite a bit of sense that the British pound remains somewhat buoyant in this atmosphere. That being said, it does not mean that we are going to go straight up in the air, rather it means that we have the potential to ride out a longer-term trend. At this point, it looks as if the 1.33 level is going to be a potential support level.

GBP/USD Video 01.09.20

To the upside, I fully anticipate that the British pound will go looking towards 1.35 level, which is a large, round, psychologically significant figure and of course an area that has been important in the past. I also believe that we will eventually break above there, as the Federal Reserve now has started to target “an average level of inflation” rather than a hard number of 2%. In other words, Jerome Powell has stated that the Federal Reserve is willing to let inflation run a little hotter at times, thereby raising the bar for higher interest rates.

Quite frankly, I believe that most central banks around the world are going to fall in line but in the short term it certainly looks as if the Federal Reserve is leading the charge towards currency devaluation. It is worth noting that until recently the US dollar had been extraordinarily strong, so a little bit of devaluation is perfectly fine with the Fed.

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