British Pound Continues to Carve Out Tight Range Against US Dollar

The British pound has tried to rally during the trading session on Tuesday but continues to see resistance just above. Looking at this chart, the market has the 200 day EMA above, while it has the 50 day EMA sitting just below. The 50 day EMA sits right at the 1.35 level as well, which is a large, round, psychologically significant figure. Because of this, I think it is an area that will be difficult to break through. However, if we were to do that then we could see the US dollar strength in not only here, but in multiple other markets as well. Remember, the Bank of England is in a tightening cycle, and it is just as aggressive as the Federal Reserve is.

GBP/USD Video 16.02.22

On the other hand, if we can take out the 1.36 level on a daily close, then it is possible we could go looking towards the 1.37 level above. If we can get above there, then it can become more or less a “buy and hold” situation. At that point in time, I suspect that not only with the British pound be strong, but we would see a lot of negativity when it comes to the US dollar. Remember, the US dollar is the first place people run to when they have a lot of concerns, so that would obviously be an exacerbation of the “risk on” attitude around the world if it happens. The one thing that I think you can count on is a lot of choppiness, but to be honest here – you could say that about almost every market.

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