British Pound Bounces From Big Figure

The British pound has pulled back a bit during the course of the trading session on Monday to reach towards the 1.35 handle. This is an area that will continue to be important in general, as it is a large, round, psychologically significant figure, and of course an area that I think will more likely than not continue to be important due to the fact that the 50 day EMA sits there. If we were to break down through that area, it could lead to a very strong US dollar indeed, as the British pound has been a bit of an outlier when it comes to working against the US dollar due to the fact that the Bank of England has been much more hawkish than most other central banks around the world, with perhaps the exception of the Federal Reserve.

GBP/USD Video 15.02.22

Looking at this chart I think it is probably only a matter of time before we have to make a bigger move, because we are compressing so tightly. Sooner or later, the volatility picked back up in this pair, probably based upon what happens with the US dollar more than the British pound. Because of this, you need to pay close attention to the US Dollar Index, but one thing that I would say about this chart is that if we do in fact break down, you may simply want to buy the US dollar against other currencies because you should have more real estate the cover in a chart like the New Zealand dollar against the greenback.

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