- The British pound initially fell during the trading session here on Tuesday, finding the 200 Day EMA rather quickly.
- The 200 Day EMA of course is an indicator that a lot of people will be watching for support, and so far, looks like it is in fact holding.
- Whether or not it holds for the longer term we don’t know yet, but it’s worth noting that the British pound has been a bit different than many other currencies around the world in comparison to the US dollar.
Technical Analysis
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The technical analysis for this pair is somewhat sideways in general but recently has been somewhat negative. The 200 Day EMA is an indicator that a lot of people watch closely, so if we were to break down below there, I think we go testing the bottom of the larger consolidation area, perhaps sending the British pound down to the 1.32 level. Anything below there then opens up the “trapdoor of doom” in this market. If we were to break down below that level, then I think you would not only see the British pound start to fall against the US dollar, but you would start to see many other currencies get absolutely unraveled as the British pound has been one of the stronger currencies against the greenback.
If we do rally from here, the 1.34 level above is a resistance barrier that I think you need to watch very carefully, because it has been important a couple of times in the past. The 50 Day EMA currently sits at the 1.3450 level and is dropping, so I think that comes into the picture for potential resistance. We are between the 200 Day EMA indicator and the 50 Day EMA indicator, which typically brings quite a bit of volatility into the market. Ultimately, I think we continue to be somewhat sideways, but I also recognize that this is a lot of noise just waiting to happen.
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