What do we need to make an educated guess about GBP trends in 2023? To answer this question, we need to analyze GBP fundamentals and enrich them with good old technical analysis tools. This article will discuss GBP predictions for 2023 against the Euro, USD, and JPY, so stay tuned.
GBP fundamentals
After Brexit, the main trend for GBPUSD was bearish. But currently, the pound seems to overcome the long-lasting effects of the UK leaving the EU. This is good news for the UK and neutral for traders. Traders are going to make money no matter what the market does. If the trend is bullish, traders will long for the asset and wait for the price to increase and make a profit. When there is a bearish trend, traders will short-sell the asset and earn money from falling prices. So, the main challenge for traders is to see price direction in time before it makes the most of the move. The main tendencies from the UK’s fundamentals are positive for GBP for 2023.
The new PM seems to be a very knowledgeable person in finances and even predicted financial problems under Truss. This is going to have a positive impact on GBP’s strength in 2023. The UK was the first supporter of Ukraine and stands by Ukraine to this day. This is a very important and good tendency, as the UK is a powerful economy and ally for people fighting for their freedom.
Since overall fundamentals are bullish for the GBP, let’s switch to technical and see how GBP pairs are going to look in 2023.
GBP technical analysis of GBPUSD, EURGBP, and EURJPY
There are some useful chart patterns to consider when analyzing markets technically. Patterns or chart patterns are formations that occur during price movements. Depending on the pattern formed, they can predict trend reversals and price continuations. Flags, for example, are popular and easy-to-understand continuation patterns. When spotted on the chart, a flag pattern can predict the continuation of the price trend. Flags usually happen after a strong trend move, after which prices are consolidated in a small parallelogram to continue the main trend again. Spotting one is not as easy actually, but really a great pattern to predict price movements.
Let’s switch to GBPUSD charts to see what’s going on. The pair is at a major resistance level and is going to test the 1.22 level. It is not clear what to expect at this point, as traders will have to wait for GBP to break upward or fail to break the level and fall down. In case of a successful breakout, the next important zone is allocated at the 1.42 level. If a breakout happens, there is not much resistance before that level, and is going to be a good profit target. Stops would be slightly below the current level of 1.22.
In trading, the main idea is to understand what is going on in the market rather than predict it. No one has a crystal ball and every analysis should be taken with a grain of salt. When there are strong ongoing movements on the market, the best way is to follow these movements and remember that trend is your friend until it lasts.
Before recent years, GBP pairs were known for their violent price movements, making some rookies bankrupt in a single sweep. This has changed since modern technologies enabled more liquidity and GBP pairs are now more newbie friendly. Will GBPJPY continue its strong downward movement? The question gets answered as soon as it tests the next support zone at the 157-158 range. As of now, GBPJPY seems determined to move downward and is going to continue like this for some time. 155.39 is going to be another important level for traders to look at very closely. It made GBPJPY change its direction several times in the past and acts as a strong support now.
Key takeaways
After consistent bearish trends caused by Brexit, the pound is finally getting to hold its ground strong against other major currencies. The new Prime Minister is very educated in finance and this is going to have a positive impact on the pound in 2023.
Generally, GBPUSD is in a strong resistance zone and is testing the 1.22 level.
For EURGBP the next resistance is located at the 0.928 price level. Before that, the upward movement is more likely to continue uninterrupted.
GBPJPY is below the 160 level and the next important support zones to look at are 157.25 and 155.39. Before these support zones, the price is more likely to move downward. The bears don’t seem to lose control for now for GBPJPY.
