GBP/USD exchange rate is one of the most closely watched currency pairs in the world today. This pair has given signs of a positive trend recently, causing investors to speculate on how high the exchange rate for this pair is likely to go before the year runs out. Will the pound maintain its strength against the US dollar? What are the possible targets to expect from GBPUSD? This work has provided useful insights on the prospects of GBPUSD.
Current Market Conditions
GBPUSD has been on a positive trend since 2023. The pair commenced its positive trend at the beginning of the year, after reaching a yearly low at 1.18410 in January. As of August 21, 2023, the exchange rate of GBPUSD stands at 1.27354 and has been flashing some signs of a more positive trend. The future price of this pair is to be influenced by several factors, and we shall move on to discuss some of these factors below to guide investors seeking to trade GBPUSD.
Possible Factors to affect the performance of GBPUSD
Here are some of the factors that are likely to affect the performance of GBPUSD for the rest of 2023:
- Interest rates: The Bank of England (BoE) is expected to continue raising its interest rates to combat inflation. This could make the pound more attractive to investors, as it would offer higher yields. However, if the US Federal Reserve (Fed) decides to raise the rates further, it could strengthen the dollar and put downward pressure on the pound.
- Economic growth: The UK economy is expected to grow at a slower pace in 2023 than the previous year. This could weigh on the pound, as investors may view the UK as a less attractive investment destination. However, the US economy is also expected to slow down, so this factor could have a less pronounced impact on the GBPUSD exchange rate.
- Oil prices: Oil prices are a major driver of the UK economy, as the country is a major oil producer. If oil prices remain high, this could support the pound, as it would boost the UK’s trade balance. However, if oil prices fall, this could weigh on the pound.
Forecast for GBPUSD: How high is this pair likely to go?
It is difficult to predict with certainty what to expect from any currency pair, as the price movement for various currency pairs is influenced by a myriad of factors. However, based on current market conditions and expert opinions, there are some important levels to expect from the GBP/USD exchange rate:
- First Target 1.280: A retest of this level which was initially reached in early June 2023; is seen as the first target to expect from this pair in the future. A break above this level would signal a more sustained rebound in the pound.
- Second Target 1.301: This is the level that the exchange rate reached in December 2022. A break above this level would be a bullish signal for the pound and could open the door to further gains.
- Third Target 1.320: This is the level that the exchange rate reached in September 2022. A break above this level would be a very bullish signal for the pound and could signal a major trend reversal.
Of course, these are just some potential price targets and there is no guarantee that the price will eventually reach these levels. Therefore investors need to exercise caution while trading this pair across different trading platforms like XTB, Pepperstone, and Plus500 trading platforms.
Conclusion
The long-term direction for the GBPUSD exchange rate is uncertain. However, this pair is expected to remain volatile in the near term. As for the long term, the pound may appreciate against the dollar, given that the UK economy is forecasted to grow at a faster pace than the US economy. However, other factors might play out and hamper these expectations.
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