- The GBP/USD has broken down during the trading session, even though the Bank of England raised interest rates.
- This is because the bank does not necessarily look like it’s going to remain extraordinarily hawkish, and therefore traders may have gotten a bit burned by the idea of going higher.
- Beyond that, you also have the Federal Reserve with its announcement during the previous day showing just how hawkish they are going to be.
The size of the candlestick for the trading session on Thursday is rather impressive, suggesting that perhaps we have further to go to the downside. However, what I hope to see during the Friday session after the Non-Farm Payroll announcement is a short-term bounce that I can start fading again. It’s likely that the British pound will go down to the 1.10 level underneath. The 1.10 level underneath will continue to be important, so it does make a nice target. If we were to break down below there, then it’s likely that the market goes down to the 1.05 level. We have been in a downtrend for quite some time, but it’s also worth noting that the 1.10 level is the bottom of the of rising wedge, which is the target.
Downward Pressure Ahead
On the upside, the 1.15 level is an area that would offer a significant amount of resistance and a ceiling in the market. If we were to break above there, it would obviously be a very bullish sign. However, it’s difficult to imagine how that plays out, so with that being the case, the market is likely to continue to see plenty of downward pressure, and I do think that the British pound may find itself down at the very bottom.
The 50-Day EMA is at the top of the candlestick for the trading session for Thursday, so at that point, I think it shows just how technically driven this market is as well. With this being the case, the market is likely to continue to see plenty of opportunities to pick up “cheap US dollars” every time this market rallies. The first sign of exhaustion will be a selling opportunity from what I can see. Beyond that, the downtrend line is also worth paying attention to in the longer-term. Ultimately, it looks as if we are rolling over and respecting that trendline yet again.
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