British Pound Forecast (GBPUSD) Sterling Helpless in The Face of US Dollar Dominance
What's on this page
GBP/USD Price, Chart, and Analysis
- The US dollar continues to flex its muscles, brushing Sterling aside.
- GBP/USD in freefall as an important multi-month support zone nears.
- EUR/GBP below 0.8250 as the Euro weakens further
Trade Smarter - Sign up for the DailyFX Newsletter
Receive timely and compelling market commentary from the DailyFX team
As we close out the week, the overarching driver of price action in the FX market is US dollar strength and its dominance over all other major currencies. EUR/USD has just printed a near two-year low of 1.0885, while GBP/USD has just changed hands at 1.3220, over ten big figures below its June 2021 high of 1.4242. While Sterling is weak, a substantial portion of this sell-off is US dollar driven and with little or no reason for the USD to fade any of its recent gains, cable is likely to test support between 1.3160 and 1.3200.
GBP/USD Daily Price Chart – March 4, 2022
Retail trader data show 60.81% of traders are net-long with the ratio of traders long to short at 1.55 to 1. The number of traders net-long is 6.47% higher than yesterday and 1.92% higher from last week, while the number of traders net-short is 7.79% lower than yesterday and 3.01% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.
Sterling is outperforming an even weaker Euro, continuing a longer-term trend to the downside. An unbroken series of lower highs and lower lows remain steadfastly in place with the pair now touching lows last seen in June 2016. The CCI indicator is flashing a heavily oversold warning which may temper further short-term losses but as long as the trend remains then a longer-term move to 0.8000 cannot be discounted.
EUR/GBP Daily Price Chart – March 4, 2022
The economic calendar is relatively clear of UK news next week with the only release of interest next Friday being the monthly GDP figures.
For all market-moving economic data and events, refer to the DailyFX calendar
What is your view on GBP/USD and EUR/GBP – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.