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British Pound vs US Dollar Technical Analysis
The British pound has fallen a bit during the trading session on Thursday after the CPI numbers came out a little bit hotter than anticipated. Because of this, the market is likely to continue to go in a downtrend over the longer-term, but that doesn’t mean that we will get the occasional bounce. The market has recovered quite nicely, but now it looks like we are at least considering continuing the overall downward trajectory that we had previously seen grip the market.
If we break down below the 1.22 level, then it’s likely that we will continue to drop much further, and at that point in time it would probably fall right in line with a “strong US dollar” narrative that we have seen as of late. The 1.2350 level above is significant resistance, as it had previously been supported so there should be a certain amount of “market memory” in that region. The 50-Day EMA is starting to race down toward that area, so that of course is going on for a little bit of resistance as well.
Keep in mind that the US dollar of course is considered to be a safety currency, so it does make a lot of sense that we would see this market reach toward the greenback if we continued to see a lot of geopolitical concerns as well. Alternatively, this is a market that I think will continue to be very noisy, but quite frankly I just don’t see why the British pound rallied other than the fact that it had been oversold. At this point, it would not surprise me at all to see a little bit of follow-through, perhaps sending the British pound back down to the 1.20 level.
The 1.20 level is a large, round, psychologically significant figure, and then after that we have the 1.1850 level that is also worth paying close attention to as it is a major swing low going back several months. It is worth noting that as the market is digesting this information, it does seem like US dollar bombing is starting to accelerate a bit. It looks like the longer-term trend is starting to reassert itself.
For a look at all of today’s economic events, check out our economic calendar.
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