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British Pound vs US Dollar Weekly Technical Analysis
The British pound initially tried to rally during the course of the trading week, but gave back gains to show signs of weakness yet again. All things being equal, the 1.2350 level underneath is a short-term support level, but if we were to break down below there, it’s likely that the market could go down to the 1.20 level, possibly even the 1.1850 level after that. Keep in mind that there are a lot of concerns about the overall economy, as the US dollar will be the safety asset that a lot of people look toward.
The short end of the yield curve in America continues to show rising rates, so I do think that is something that you have to pay attention to. Ultimately, I think that it continues to drive the value of the US dollar higher, and therefore it does make sense that the British pound would suffer against it. Having said that, if we were to turn around and take out the top of the candlestick for the week, then it opens up the possibility of a move to the 1.2650 level. Breaking it above the 1.2650 level opens up a complete turnaround, but right now we would need to see the US dollar selloff against almost everything else.
All things being equal, we are forming a pretty big, inverted hammer, so therefore it does suggest that we have further downward pressure coming along, and therefore I think we have a situation where we could very well break down, but I think this is more a US dollar story than it is a British pound one, so therefore pay attention to the US dollar overall for directionality.
For a look at all of today’s economic events, check out our economic calendar.
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