British Pound Continuing to Build Base

Keep in mind that the British pound has been making a lot of noise as of late, so it certainly makes sense that we will see a lot of choppy behavior. That being said, I think that the 200 day EMA underneath is causing a lot of support, and of course the previous downtrend line from the channel is doing the same. All things being equal, I think this is a market that is trying to go much higher. It does make a certain amount of sense as the Bank of England is likely to raise interest rates rather quickly, and of course the United Kingdom has lifted all mandates from the coronavirus pandemic, opening up the economy even more.

GBP/USD Video 21.01.22

To the downside, the 200 day EMA underneath continues offer support, and I think a lot of people will look at it as a potential area of buying pressure. If we were to break down below the 200 day EMA significantly, or perhaps even the Tuesday candlestick, then I think the market goes lower, perhaps reaching towards the 1.35 handle underneath where the 50 day EMA currently sits.

The market breaking down below there obviously would throw the British pound into disarray, but I just do not see that being the case right now, so given enough time I believe that we will continue to see buyers push this market back towards the 1.37 handle, and then beyond that if things continue. Ultimately, the rising yields in the United States have helped the US dollar, but the British pound has been the outlier for a while.

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