GBP/USD Price Forecast – The British Pound Threatens 1.20

Published: Jul 1, 2022, 13:54 UTC•2min read

The British pound has been falling all day on Friday, for in the 1.20 support level. This is an area that I think will continue to be crucial, so it’s most certainly worth waiting and seeing if we can close down below here on a daily candlestick.

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GBP/USD

+0.28

British Pound vs US Dollar Technical Analysis

The British pound has fallen rather hard during the trading session on Friday to reach the 1.20 level. Because of the importance of this level, and the psychology around it, I will be paying close attention to this and seeing how close is on the day. If we close below the 1.20 level, that almost certainly means that we are going to go much lower. When you look at the chart, it does not take a lot of imagination to see an “H pattern”, which is a very negative setup.

If we do rally from here, believe that the 1.22 level will offer resistance, followed by the 50 Day EMA which is currently at the 1.2450 level. Longer-term, despair is probably going to try to find the 1.18 level, and then eventually 1.16 after that. This is a summer that is going to be all about owning the US dollar, as we worry about the global recession and the supply chain issues around it.

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Furthermore, the Federal Reserve looks very likely to continue tightening going forward, so that works in favor of US dollar holdings as well. At this juncture, it remains a “pay the rally” type of situation, and I do not know if it changes anytime soon. In fact, I think we would have to break above the 1.26 level to even have that conversation.

Fading rallies at the first signs of exhaustion will probably be how I play this market for the most part over the next several weeks, if not several months.