GBP/USD Forecast: British Pound Continues to Hover around the 50-Day EMA

GBP hovers around 50-Day EMA, caught in choppy trade between 1.25 and 1.2750 levels. Market volatility influenced by Fed's rate decisions and BoE's stance on inflation, suggesting a range-bound strategy.

  • The British pound initially did rally during the early hours on Monday, as we continue to hang around the 50-Day EMA.
  • That is a major indicator that a lot of people pay close attention to and therefore I think you should pay close attention to it as well.

Ultimately, this is a market that is trying to sort out where it’s going to go next as we have had such a significant plunge recently. At this point, we are still between the 50-Day EMA and the 200-Day EMA underneath at the 1.25 level, which obviously is a large, round, psychologically significant figure.

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Noisy British Pound

GBP/USD Forecast Today - 13/02: GBP Hovers Near 50-Day EMA (Graph)

The noisy British pound continues to be a feature of the market, not necessarily a bug. After all, this is a market that has been very choppy as of late, and at this point I think we are trying to sort out whether or not we are going to stay in the larger range between the 1.25 level on the bottom and the 1.2750 level above. With this, the market is likely to continue to see a lot of volatility, and at this point we are sitting right around the middle of that range; therefore, it could be a scenario where we are essentially at “fair value.”

If we were to break out of this 250 point range, then we could have a bigger move. I think a lot of this comes down to the idea that the Federal Reserve is going to push back interest rate cuts, and therefore it does make a certain amount of sense that the US dollar has been a bit more resilient than people had thought it would be. At the same time, the Bank of England is going to have to sort out whether or not it is going to have to loosen monetary policy, or if he will have to continue to fight inflation as inflation has been extraordinarily “sticky” over the last several months. That is not just a British problem but a worldwide problem at the moment right now. With this being said, I think you can use a range bound system to take advantage of the lack of movement in the British pound overall. With that being said, be cautious about the amount of money you put into this market.

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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.