GBP/USD Forecast: Pound Fails to Hold On to Gains

Christopher Lewis

Ultimately, I think that we will get a bigger move, but it may not be until after we get the jobs figure which is at 8:30 in the morning New York time on Friday.

The British pound initially shot higher on Wednesday but gave back the gains rather quickly as Jerome Powell has not changed much of his demeanor. He has previously walked back anything remotely close to being hawkish, and the fact that he did not do that during the session may have been a bit of a surprise for traders. Because of this, we have seen the US dollar strengthening overall, and it does make sense that as traders have been trained to believe that the Federal Reserve is going to protect them, and they have no idea what to do with the idea that they may not.

When you look at this chart, you can see clearly that we had given up quite a bit of momentum, and it now looks as if rallies at this point will probably continue to get sold into. If we can take out the 1.34 level, then it is possible that we could have this market go much higher to the upside. Ultimately, the real “ceiling in the market” is probably closer to the 1.35 handle. That is where the 50 day EMA sits just above and is sloping lower. I think this is an area where we would see a certain amount of interest, so I would be looking to pick up “cheap dollars” in that area if we see any type of exhaustion.

When I look at this chart, I also recognize that if we were to break down below the bottom of the candlestick from the Tuesday session, we could see real ugliness jump back into the market. If that were to be the case, then I anticipate that the market will go looking towards the 1.30 level. That is a large, round, psychologically significant figure that a lot of people would pay close attention to, so I anticipate it would be difficult to break through. Keep in mind that the jobs number is on Friday, and I suspect that the Thursday session itself will be rather quiet. Ultimately, I think that we will get a bigger move, but it may not be until after we get the jobs figure which is at 8:30 in the morning New York time on Friday.

GBP/USD

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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