GBP/USD Forecast: Bounces Back as Market Eyes 1.31 Breakout
- During my daily analysis of the GBP/USD pair, I see that we are bouncing a bit, and it does look like we are ready to go going higher.
- The 1.30 level underneath is a large, round, psychologically significant figure, and an area that is backed up by the 50-Day EMA overall.
- Ultimately, the market pulling back the way it has is a sign that perhaps we are starting to see a little bit of value offered in this currency pair, and breaking above the 1.31 level could bring in more buying pressure as we continue to see a lot of momentum jump back into this market.
All things being equal, it’s worth noting that the Bank of England is probably going to be cutting rates, but it seems like most people are out there focusing on the Federal Reserve, and the fact that we are more likely than not going to continue to cut rates in an aggressive manner, at least as far as the market is concerned, and therefore it’s likely that we will continue to see a lot of traders trying to get short of the US dollar in general. Whether or not that actually pans out for the longer term, the reality is that the momentum is with the British pound at the moment.
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1Central banks around the world are racing to the bottom
Central banks around the world are racing to the bottom as far as interest rates are concerned, so to be a bit of an interesting situation to trade, mainly due to the fact that it comes down to the destruction of their own currencies, as the market will try to price all of that in. All things being equal, this is a market that I think continues to see the US dollar in its crosshairs, but if we do get some type of massive “risk off move”, this will send the US dollar much higher against most currencies, including this one. As things stand right now though, there’s nothing on the chart that suggests that we are going to do so.
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