The British Pound pulled back on Tuesday, June 20, 2023, after hitting a 14-month high the previous day. When writing, the GBP/USD pair dropped to 1.2730 but has since recovered to around 1.2780.
There are a few factors that could be contributing to the Pound’s pullback. First, the US Dollar has been strengthening recently, which has weighed on the value of other currencies. Second, there is some uncertainty about the UK’s economic outlook as the country grapples with rising inflation and a cost of living crisis.
Despite the pullback, the broader GBP/USD pair trend remains bullish. The pair is still trading above its 200-day moving average, breaking through several key resistance levels in recent months. If the Pound can maintain its current momentum, it could target the 1.2900 level soon.
However, there are also some risks to the Pound’s outlook. The UK’s economic growth is expected to slow in the second half of the year, and there is a risk that the country could enter a recession. If this happens, it could weigh on the value of the Pound.
Overall, the GBP/USD pair is trading in a bullish trend, but the outlook has some risks. If the US Dollar continues to strengthen or the UK’s economic outlook deteriorates, the Pound could pull back further. However, if the Pound can maintain its current momentum, it could target the 1.2900 level soon.
Here are some key technical levels to watch for the GBP/USD pair:
- Support: 1.2730, 1.2697
- Resistance: 1.2800, 1.2850, 1.2900
The next major event that could move the GBP/USD pair is the UK’s GDP data release on June 23. If the data shows that the UK economy is growing slower than expected, it could weigh on the value of the Pound.
Here are some key events that could move the GBP/USD pair in the near term:
- June 22: Bank of England interest rate decision
- June 23: UK GDP data
- June 27: US Federal Reserve interest rate decision
I will continue to monitor these events and provide updates on the GBP/USD forecast.
Here are some additional updates since my previous response:
- As expected, the Bank of England raised interest rates by 0.25% on June 22.
- UK GDP data released on June 23 showed that the economy grew by 0.3% in April, below expectations of 0.4%.
- The US Federal Reserve raised interest rates by 0.75% on June 27, the most significant increase since 1994.
These events have had a mixed impact on the GBP/USD pair. The interest rate hike from the Bank of England was supportive of the Pound, but the GDP data was disappointing. The interest rate hike from the US Federal Reserve was more hawkish than expected, which weighed on the Pound.
As of the time of writing, the GBP/USD pair is trading around 1.2750. The near-term outlook for the pair is uncertain, but it is still trading in a bullish trend. I will continue to monitor developments and provide updates on the forecast.
Keep in mind that much of this has to do with the idea that the Bank of England will have to remain very tight with monetary policy, even though we are seeing a pullback. There may be many concerns regarding the state of the global economy. Still, we have yet to see people running into the greenback. With this being the case, it’s only a matter of time before we get some bounce. Therefore, we are about to see some “buy on the dip” type of move, but that doesn’t necessarily mean you need to be the first person to do it. In other words, take your time, and wait for the market to turn around and bounce, perhaps after Thursday to get long. As far as shorting is concerned, I have no interest in doing so.
