The British pound has broken down significantly during the course of the week to confirm that there has been less than impressive attempts to pick the market back up, although Friday has been slightly positive heading into the New York session. The 200 week EMA of course is an area that longer-term traders may pay attention to, but at the end of the day this is all about the US dollar strength more than anything else. After all, the fear out there is palpable, and that does tend to drive money into the greenback overall.
GBP/USD Video 31.01.22
With this being said, and of course the fact that the Federal Reserve has reiterated its desire to tighten monetary policy, it does make quite a bit of sense that we continue to see the US dollar strengthen in general. The market being bearish is nothing new, and if we break down below the bottom of the candlestick for the week, I think at this point in time we would see a move down towards the 1.32 handle, which was where we had formed a little bit of support at previously. If we do in fact reach down towards that area, it will be a major fight between the buyers and the sellers. Ultimately, this is a market that has seen quite a bit of noisy behavior, but it is worth noting that in general the British pound has been a bit of an outlier against the US dollar. After all, while other currencies were absolutely collapsing, the British pound has initially rallied, and then did “less bad” against the greenback.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.