British Pound Gives Up Gains for the Week

The British pound has rallied initially during the course of the week but has given back the gains to form a less than enthusiastic candlestick. It currently looks as if the 1.35 level underneath will continue to offer support, so I am paying close attention to that level. That being said, if we were to break down below that level, I think we could very easily test the lows at 1.3350 level from the previous couple of candlesticks. Ultimately, I will have to wait and see if that happens and may have to enter via the daily chart or some other lower timeframe.

GBP/USD Video 14.02.22

It looks as if the dollar continues to strengthen in general, but the British pound may be a bit of an outlier in the sense that the Bank of England is also very hawkish at the moment. However, when you look at the chart you can clearly see there is a downtrend line that we have been playing around with, and it looks as if we are respecting it. As long as that is the case, I think we do struggle to go higher, lease for any type of meaningful move. If we do break above there, then the market is open up to the possibility of the 1.37 level being tested. A break above there then the British pound becomes very bullish.

On the other hand, if we were to break down below the 1.3350 level, then it is almost certain that the British pound will go looking towards the 1.32 level given enough time. Expect a lot of choppy behavior and therefore this might be a difficult one for longer-term traders.

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