- The British pound has fell significantly on Thursday, as the Bank of England decision has come and gone, with the US dollar continuing to fight back against the previous move.
The British pound has fallen pretty significantly during the trading session after we had the Bank of England interest rate decision, which was not much of a change, but was a change in the way people were voting. There were more people abstaining, so I think really at this point in time that suggests that perhaps there is some confusion at the Bank of England.
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With that being the case, the 50-day EMA sits just below the 1.35 region, an area that I thought we could possibly drive down to. We have done that; now we have to see whether or not it holds. I think at this point in time the death of the US dollar was premature by a lot of traders in their analysis out there.
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I think we are starting to see that play out against certain currencies - not all, but certain ones are starting to struggle a little bit, namely the euro, namely the British pound. I don't necessarily think that the trend is going to change here, but it is possible that traders may look at this as an overbought position.
Now we may hang around the 1.35 level in order to find some type of directionality. A bounce from here could end up being a nice opportunity to reach towards the 1.3750 level, but we will just have to wait and see.
If we break down from here, then the 1.33 level and the 200-day EMA could be the target for short sellers. Friday could be interesting, but we will just have to wait and see. I think the bulls probably need to see stability, not necessarily an impulsive move, just boring trading.
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