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GBP to USD Forecast – British Pound Reaches the 1.20 Level

GBP to USD Forecast Video for 07.02.23

British Pound vs US Dollar Technical Analysis

The British pound has gapped lower to kick off the trading week against the US dollar, but seems to be finding a little bit of support near the 1.20 level. The 1.20 level courses a large, round, psychologically significant figure that people will be paying close attention to, and because of this I think we’ve got a situation where the market may bounce a bit, but if we do break down below that 1.20 level, it could open up a floodgate of selling. Ultimately, the British pound has underperformed most of the other major currencies, so I think if we see US dollar strength, that will only embolden the selling of this particular pair.

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If we do get that move, the 1.1850 level should be support, but if we break down below there, then it’s likely that we could see a big move lower, as it would be a breach of major support. In that scenario, I suspect that the British pound would drop down to the 1.15 level underneath. It may also be worth noting that the 50-Day EMA is trying to break above the 200-Day EMA but has pulled back a bit.

This happens quite often as moving averages are lagging indicators, and therefore sometimes are late to the party. Alternatively, I think this is a situation where given enough time we could see a turnaround, but we need to see the US dollar fall in general to make that happen. That being said, the market is likely to see a lot of volatility, but I think the most recent move tells you just how weak the British pound is.

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

This article was originally posted on FX Empire

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