British Pound Continues to Test Trendline

The British pound has gone back and forth during the course of the week as we continue to see a lot of volatility. At this point, we are trying to decide whether or not we are going to break out to the upside. If we can, then it is likely that we will go looking towards the 1.37 level above. Breaking above there could open up the possibility of a longer-term move, but we need to see a little bit of good news it in order to make that happen. It should be noted that the 10 year Gilts in the UK are offering fairly robust interest rates, but you can say the same thing about the Federal Reserve and the United States. Because of this, this market might be a bit choppy.

GBP/USD Video 21.02.22

That being said, the market needs to see a lack of geopolitical concern in order to really follow the bond markets. If we were to break down below the 1.35 handle, then it is likely that we could go looking towards the 1.3350 level, which is an area that previously caused a bit of support. Because of this, I think we would have to look at that through the prism of potentially offering another buying opportunity for those who are bullish of the Pound. That being said, we need stability, something that we just do not have at the moment and as we continue to watch Ukraine, it will be interesting to see how that all plays out. After all, that is a wildcard that there is no real way to get a grasp on until that happens.

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