British Pound Forecast: GBP/USD Coils Ahead of July
GBP/USD seems to be coiling in a narrow range after clearing the 2022 high (1.3749).
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British Pound Outlook: GBP/USD
GBP/USD seems to be coiling in a narrow range after clearing the 2022 high (1.3749), but the exchange rate may attempt to test the October 2021 high (1.3835) should it continue to track the positive slope in the 50-Day SMA (1.3445).
British Pound Forecast: GBP/USD Coils Ahead of July
Keep in mind, GBP/USD rallied to a fresh yearly high (1.3771) after dipping below the moving average for the first time since April, and the consolidation in the exchange rate may turn out to be temporary even as Bank of England Governor Andrew Bailey reiterates that ‘a gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate’ while speaking at British Chamber of Commerce.
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The comments suggest the Monetary Policy Committee (MPC) will further unwind its restrictive policy after voting 6-3 to keep the Bank Rate at 4.25% in June, but GBP/USD may continue to reflect a bullish trend ahead of the next BoE meeting in August on the back of US Dollar weakness.
With that said, the opening range for July is in focus as GBP/USD appears to be coiling within a narrow range, and the British Pound may continue to outperform against the Greenback as the ongoing transition in US trade policy clouds the outlook for growth and inflation.
GBP/USD Price Chart – Daily
Chart Prepared by David Song, Senior Strategist; GBP/USD on TradingView
- GBP/USD pulls back ahead of the October 2021 high (1.3835) to keep the Relative Strength Index (RSI) below 70, and lack of momentum to hold above 1.3650 (38.2% Fibonacci extension) may push the exchange rate back toward the 1.3410 (78.6% Fibonacci retracement) to 1.3460 (23.6% Fibonacci extension) zone.
- Failure to defend the June low (1.3371) brings 1.3310 (100% Fibonacci extension) on the radar, but GBP/USD may continue to track the positive slope in the 50-Day SMA (1.3445) amid the failed attempt to close below the moving average.
- Need a move/close above the 1.3800 (161.8% Fibonacci extension) to 1.3810 (50% Fibonacci extension) region to raise the scope for a test of the October 2021 high (1.3835), with the next area of interest coming in around the September 2021 high (1.3913).
Additional Market Outlooks
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USD/CHF Selloff Stalls to Keep RSI Out of Oversold Zone
AUD/USD Recovery Materializes amid Failed Attempt to Test May Low
US Dollar Forecast: USD/JPY Reverses Ahead of May High
--- Written by David Song, Senior Strategist
Follow on Twitter at @DavidJSong
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