British Pound Gives Up Early Gains Against US Dollar

The British pound has initially shot higher during the trading session on Thursday but gave back the gains rather quickly as we approached the 200 day EMA. That being said, the market looks as if it is going to struggle to find some type of clarity in the short term as we are squeezing between the 50 day EMA and the 200 day EMA. That being said, the CPI numbers in America are extraordinarily hot, and that generally means that traders will be looking at the Federal Reserve tightening its monetary policy more aggressively. This should end up being dollar positive.

GBP/USD Video 11.02.22

If we can break down below the 1.35 handle underneath, that could open up fresh selling, perhaps sending this market towards the 1.34 level rather quickly. All things been equal, I think that is probably what happens, but it is obvious that we have a lot of support in that general vicinity. On the other hand, if we turn around a break above the 200 day EMA, then we may go looking towards the 1.37 handle but that would have to be accompanied by US dollar weakness in general. I would look around the world and see what the US dollar is doing if I thought about buying this pair, and if you do not see across-the-board weakness, you probably want to avoid that trade. Regardless, I think you can expect a lot of volatility going forward.

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