GBP/USD Forecast Video for 25.09.23
British Pound vs US Dollar Technical Analysis
The British pound has fallen significantly during the course of the trading session on Friday again but has tried to bounce a bit in order to show signs of life. If we can break down below the lows of the trading session on both Thursday and Friday, then it opens up the possibility of an even deeper fall. After all, interest rates in the United States continue to rise, and that does of course help the value of the US dollar. If we rally at this point in time, then the 1.2350 level is an area where we would have to look at it through the prism of previous support, so it should have a certain amount of “market memory” attached to it.
That being said, it is very negative at this point, so they don’t have any interest in trying to buy this market, with the 200-Day EMA needing to be broken in order to get long again. In other words, we would have to break above the 1.25 level in order to start buying pounds. I think it is only a matter of time before every rally shows exhaustion that people can start shorting again. All things being equal, this is a market that will continue to be very noisy, but I still think we have the likelihood of going down to the 1.20 level more than anything else.
In general, this is a situation where we will continue to see a lot of volatility, because the Bank of England chose to sit still instead of raising rates like everybody had anticipated. Furthermore, there were quite a few members of the MPC that decided to stay still, meaning that the British are probably done in their hiking cycle. All things being equal, this is a situation where I think you are looking for signs of exhaustion after a short-term bounce to take advantage of. I do think that the US dollar is probably going to start picking up strength again, as the US Dollar Index is in the process of breaking above the crucial 106 level.
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This article was originally posted on FX Empire
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