Before we can predict GBP prices for 2023, we will need to consider its fundamentals against the background of the world economy and geopolitical situation. Then we add some technical indicators and use charts to create a complete picture of the GBP/USD and EUR/GBP pairs.
Below, we will show you everything about GBP’s current rates and forecasts for the near future.
Current Status And Overview Of The GBP
Starting with fundamentals, Brexit hit the pound hard, resulting in a substantial downward rally across all GBP pairs. Pound pairs were good trading tools because of their easy bearish predictability. But the situation is slightly different now. The world economic growth is worsening, and the European energy crisis makes it more probable that the pound will lose value against the dollar like other currencies worldwide. Britain’s pound is a strong currency, and the UK is an economically powerful country with the potential to affect significant world events.
Borris Johnson was famous for his attempts to support Ukraine and ensured that all developed countries kept arming Ukraine to defend its freedom against Russian aggression. Like its US counterpart, BOE has dramatically increased interest rates to fight double-digit inflation. Inflation caused a cost of living crisis in the UK. Investors may find the pound less attractive because of rising taxes fears. These all can cause the GBP to weaken further, resulting in an overall bearish outlook for England’s fiat currency.
Compared with Euro, GBP could still hold its ground since Europe is facing an energy crisis. According to the above statements, GBPUSD could be ready for a bearish momentum change, and we could see EURGBP in a sideways market for some time in 2023. Fundamental analysis paired with strong technicals will further show the overall picture clearer. Do not forget this article is not financial advice; it just provides the author’s objective view deduced from all facts he gathered. We will analyze GBP/USD and EUR GBP pairs in more detail below.
Detailed technical analysis of GBP/USD and EUR/GBP pairs
Fundamentals aside, technical analysis is always a way to understand the current currency situation further and predict future trends. But you will need the most powerful and reliable indicators to increase the chances of successful predictions.
According to these MT5 indicators, GBP/USD could test 1.10 levels. As the USD gains its value against all other currency pairs and BOE shifts the UK from inflation to recession, it could further accelerate the fall of the GBP. The situation is not bad for the pound if we compare it with the Euro. Europe is facing even more significant challenges now, and the debt crisis and rising energy prices weaken the Euro more.
Source: TradingView GBP/USD Daily Chart.
Let’s analyze the pound more technically. On a daily GBPUSD chart, the RSI has touched the upper oversold level and returned to the downside. This could be seen as a bearish signal. The 100-day moving average is starting to flatten, increasing our bearish prediction success probability. GBPUSD has been in an upward correction for almost two months, and the downward reversal could occur anytime now on the daily chart.
On a weekly chart, the picture is a bit different, there is a strong impulse upwards, and RSI is quickly approaching 70 overbought levels. When signals from both timeframes collide, it will be a solid short-selling opportunity.
Source: MetaTrader 5 EUR/GBP Daily chart.
Continuing our analysis of EUR/GBP, it appears that the 100-day moving average provided weak dynamic support, and the pair is in a sideways movement. RSI also confirms this by being between oversold and overbought levels. This makes EUR/GBP hard to predict, and extreme caution is advised if traders decide to touch the pair. This struggle back and forth between EUR and GBP could mess up the EUR GBP price chart to a more choppy market. It is not a good idea to trade in a choppy market.
Trading trends and channels are a much better choice, and GBP/USD is more susceptible to making an excellent downward move. Just throw in a few more indicators and wait for good selling opportunities. At least three of four hands are more than enough to do the job. Overall, in 2023 GBP/USD could go down, and EUR/GBP is likely to get into a choppy market.