- The British pound initially fell against the US dollar during trading on Tuesday but has since turned around to show signs of life.
- By doing so, it looks like we are going to continue to stay within the same range that we have been in for a while, between the 1.29 level and the 1.30 level.
- This is an area that we have been in for a while now.
With that being the case, I am definitely watching this closely because I do believe that a move above 1.30, maybe 1.3050 or so could kick off the next leg higher. There is definitely an anti-US dollar bias at the moment. And as long as that ends up being the case, I think you have a situation where you could see the British pound truly take off.
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This is further exacerbated by the latest Monetary Policy Committee voting record, suggesting that only one of the members was talking about cutting in London, and that is a bit more hawkish than originally thought. Nonetheless, what we're doing right now seems to be working off some of the excess froth from the massive move higher, and we are trying to sort right now whether or not momentum will return. I do think momentum returns eventually, but I also recognize that this is a market that is very, very noisy and very positive, at least as long as we can stay above the 1.2860 level.
If we were to break above there, then maybe a pullback to the 1.2750 level is in the cards. For what it's worth, just formed a golden cross when the 50 day EMA crossed above the 200 day EMA a couple of days ago. So that's also a bullish sign, although almost always a late one.
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