British Pound Has Strong Week

The British pound has rallied significantly during the course of the trading week to not only break above the 1.35 handle, but also piercing above the 50 week EMA. We did give back some of the gains, but at this point in time it looks like we are threatening the previous downtrend and it looks like the structure of the market has started to change. You can see also that there is a downtrend line, and it looks like we are trying to figure out whether or not we can break above there as well.

GBP/USD Video 07.02.22

A pullback at this point I likely find support, extending down to about the 200 week EMA, sitting right around the 1.34 handle. If a break down below the candlestick from this week would of course be very negative and send the British pound much lower. The Bank of England has become quite hawkish, so that does help the value of the British pound, but at the same time we also have the Federal Reserve doing everything they can to tighten monetary conditions as well.

Ultimately, this is a market that I think continues to see a lot of choppy volatility, but all things being equal it is likely that we will see a lot of risk out there. Because of this, I would keep my position size relatively small, but it certainly looks as if the British pound is trying to turn things around and push his market much higher. That being said, if we do turn around a break down below the bottom of the candlestick from this past week, we could see a complete fell off.

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