GBP/USD Forecast: British Pound Remains Supported Against Greenback

• The British pound initially fell during the trading session on Tuesday but has seen a bit of support later in the session.
• It’s hard not to notice that we are still very bullish, and I think at this point in time are simply trying to consolidate and take advantage of the overall upward momentum.
• All things being equal, this is a market that I think will eventually go higher, but it may have to pull back a bit in order to offer enough value.

Retail Sales

Retail sales in the United States came out hotter than anticipated, and therefore it’s likely that the US dollar could see a little bit of a boost. However, USD against the British pound has been a different argument altogether, as inflation in the United Kingdom continues to be an issue. This might be the one pair where we really see the US dollar take it on the chin over the longer term.

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We have seen the euro gain against the US dollar as well, but all things being equal, the euro is much weaker than the British pound as seen in the EUR/GBP pair. Remember, these 3 currencies are 3 of the biggest ones in the world, so if you pay close attention to the triangulation between them, it’s actually a pretty easy puzzle to sort out. In other words, I think the British pound might be the world’s favorite currency at the moment, which is a little bit surprising considering all of the noise that we see around the world. This is especially true considering that the Federal Reserve is still a bit of a question at the moment, due to the fact that inflation is remaining very sticky in the United States.

We will have to wait and see how this plays out, but I think you’ve got a situation where the upward momentum is undeniable, and we are going to continue to pay attention to the 1.30 level above. If we can break above the 1.30 level, then we can truly take off to the upside. If not, then a pullback might be just what the doctor ordered for those looking to get long.

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