British Pound Gives Up Early Gains Against USD

The British pound initially tried to rally during the trading session on Monday but gave up gains as we continue to struggle to break above the 1.36 region sustainably. At this point time, the market continues to see a lot of push back, especially with the downtrend line just above. On the other hand, if we break down below the bottom of the candlesticks of the last couple of days, that would have this market slicing through the 200 day EMA. At that point, the market could very well go back towards the 1.35 handle.

GBP/USD Video 22.02.22

Quite frankly, this is a pair that is going to be very noisy due to the fact that both central banks are very hawkish, and it makes a certain amount of sense that this is a market that will continue to be very choppy, as the interest rate differential probably will not favor one of these currencies more than the other. At this point time, the market is likely to continue to see a lot of back and forth choppiness, and therefore you need to be very cautious with your position size in general. If we were to break down below the 1.35 level though, the market could drop towards the 1.3375 handle underneath which was a recent turnaround.

If we do break out to the upside, the 1.37 level will offer a bit of resistance, but if we can get above there then the British pound will be more or less a “buy-and-hold” situation for the next several weeks. I do not think this is an easy pair to trade at the moment though.

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