GBP/USD Forecast Today 23/12: GBP Holds Key Support (Video)

(MENAFN- Daily Forex)

• The British pound initially did fall a bit during the trading session against the US dollar on Friday, dipping below the 1.25 level.
• However, we have since seen the market turn around quite drastically, reaching all the way back to the 1.26 level.
• This is a potential double bottom that a lot of people will be paying attention to. This is also an area that has mattered for a while, so there is that as well.

If we can continue to rally, I think the British pound probably goes looking to the 1.2750 level in general. This is a market that I think you have to be somewhat cautious with your optimism, but you also have to realize that market participants will continue to see a lot of concerns with the bond markets, especially with the US yields spiking the way they had recently. This market continues to pay close attention to the bond markets.

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If we were to take out the 50 day EMA, then the market goes looking to the 1.30 level. However, there is a lot of work to be done between now and then before that actually happens. And I do think that the interest rates in America will remain a little bit elevated as the 2025 year is likely to see less interest rate cuts than people had anticipated out of the Federal Reserve.

If we do drop from here and break down below the lows of the trading session on Friday, then it's possible that the British pound drops down to the 1.23 level. I do favor shorting this pair on signs of exhaustion after short-term rallies. We've had the rally, but we haven't had the exhaustion. So with that, you have to keep an open mind, at least until the market tells you that we are in fact going in one direction or the other.

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