The British pound initially rallied against the USD on Thursday but seems to be running into a touch of trouble.
GBP/USD
The British pound initially rallied against the US dollar during trading here on Thursday, and it then tested an area that was a major resistance barrier just waiting to happen, where supply had come into the market aggressively several days ago. Now we find ourselves trying to form a bit of a shooting star just above the 200-day EMA. We have to ask whether or not the sellers are going to get aggressive.
Interest rates in America did dip just a touch. I think you also have a situation where it’s difficult to get aggressive against the US dollar, although you can certainly make an argument if there is one currency that probably has a good shot at really taking it to the US dollar, it’s the British pound.
Middle East Chaos and Range Dynamics
That being said, I think there are a lot of questions right now about what’s going to happen next in the Middle East, and that’s causing some chaos. The markets, I believe, continue to just hang around this area, and I just don’t see how markets are looking for a big move in one direction or the other. This is a currency pair that tends to range quite a bit, and we are basically in the middle of the range from last year. So, a little bit of hesitation here makes sense. Maybe a short-term selling opportunity, but I think you’re somewhat in no man’s land.
I did this yesterday, I put this out, and I suggested that maybe the British pound is a great measure of the US dollar. If the pound starts to fall, then that means your dollar is going to strengthen against multiple other currencies. If the US dollar starts to fall apart, you should see the pound be one of the biggest beneficiaries. So, I think this is still very much a tertiary indicator more than anything else.
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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions
As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire
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