GBP/USD Price Forecast – Pound Continues to Drift Lower Against Dollar

GBP/USD Forecast Video for 07-02-2024

British Pound vs US Dollar Technical Analysis

The British pound has bounced ever so slightly during the early hours on Tuesday, as the selling looks to have abated at least for the moment. The 200 day EMA of course is going to offer a certain amount of support, and that’s right where we are at. We’re above the 1.25 level as well, so that’s also something to hang your hat on if you are in fact bullish on the British pound. That being said, if we do break down below the 1.25 level, it’s very likely that the British pound continues to fall from here and goes quite a bit lower. In fact, in that move I would anticipate that the British pound reaches the 1.2350 level. On the other hand, if the market turns around we could very well go looking to the 50 day EMA, currently sitting just above the 1.26 level.

At this point, the US dollar is starting to strengthen against a lot of other currencies due to the fact that the Federal Reserve is likely to pause on the idea of cutting rates and I think the market got way too ahead of itself as far as the timing is concerned. That being said, they are going to be cutting rates in 2024 and in fact, have admitted as such, so there’s no reason to think that the British pound can’t recover.

It’s just that perhaps everybody got a little ahead of themselves and it had to readjust. Also, the fact that we are sitting at the 200 day EMA does attract a certain amount of attention in and of itself, but it doesn’t necessarily mean it has to hold after all. If we start to get more of a risk off type of move that will favor the greenback against everything, including the pound. This is the story that I am seeing in almost all “XXX/USD” pairs at the moment. With this, I believe that the Pound is going to struggle a bit, at least for the short-term. The Fed will cut later, which could help.

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