- The British pound has dropped significantly during the trading session on Wednesday, breaking below the 50 Day EMA in early trading as it looks like the British pound is going to go looking to the 1.34 level.
- This is an area that has been supported more than once, and therefore it’s likely that the market will continue to see a lot of buyers in that area, and I think it’s likely that we will continue to see a bit of consolidation overall.
- However, we have to keep an eye on multiple things at the same time.
Technical Analysis
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The technical analysis for this market is obviously sideways at the moment, and it is likely that we will continue to see a bit of that. However, if the market were to break down below the 1.3338 level, then it’s possible that we could see an attempt to get back down to the 200 Day EMA, which is a major technical indicator and an area that a lot of people will be watching for hints of where the trend is going. Ultimately, breaking down below there would be a very negative turn of events, and I think at that point in time you would probably see the US dollar destroying everything it got close to.
Keep in mind that there is a lot of risk appetite out there that seems to be struggling a bit, which makes a certain amount of sense, due to the fact that the global economy doesn’t necessarily look like it’s running on all cylinders, and if we do end up seeing the global economy slowing down, it makes a certain amount of sense that the US dollar will continue to attract a lot of attention, especially if traders are looking to run into the US Treasury market, because that of course would require owning US dollars. While this is not necessarily a referendum on the British pound, the reality is that the United States dollar will be the first place people run to if they get a bit of fear going.
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