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GBP/USD Price Forecast – The British Pound Breaks Below 1.25 Again

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British Pound vs US Dollar Technical Analysis

The British pound has fallen hard during the trading session on Tuesday as we continue to see a lot of noisy behavior. Keep in mind that the British pound has been in a downtrend for quite some time, and even though we have bounced quite drastically, the reality is that it’s still just a blip on the radar when it comes to the overall trend. With this being the case, I like the idea of shorting the market, especially now that we have recovered below the 1.25 handle.

Now that we are breaking down again, I believe that the market goes looking to the lows again, with the 1.22 level being a potential target. The 50 Day EMA above is starting to drop further, therefore it means that “dynamic resistance” is getting lower. Ultimately, this is a market where you continue to fade rallies, but obviously, you will have the occasional bump as we have just seen. Because of this, you need to pay close attention to position sizing, but clearly, this is a “one-way market” at the moment. Until the Bank of England changes its tune, it’s difficult to imagine a scenario where the British pound suddenly takes off. Unless the Federal Reserve suddenly changes the trajectory of rate hikes, I just don’t see where we could rally drastically.

On the upside, the 1.30 level is an area where I would consider the “ceiling of the trend” to be. Until we break above there, or the Federal Reserve changes its attitude, it’s difficult to imagine where this market goes other than down on every rally.

GBP/USD Price Forecast Video 25.05.22

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This article was originally posted on FX Empire

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