British Pound Slams Into 200 Day EMA

The British pound has rallied again during the course of the trading session on Wednesday to reach towards the 200 day EMA. At this point, we will see a lot of technical trading, and it is probably worth noticing whether or not we can break above there. All things being equal, the market will continue to see a lot of volatility as we are still stuck between the 50 day EMA and the 200 day EMA, which quite often will squeeze a marketplace. Nonetheless, we have now broken above the previous trendline again, so I think at this point in time, we can get rid of that trendline.

GBP/USD Video 03.02.22

If we were to break down below the 1.35 handle, then the market could go much lower. However, if we can get a daily close above the 200 day EMA it is likely that we go looking towards the 1.37 handle. Keep in mind that the Bank of England meets on Friday, so that of course will have a lot to say with what happens next, so I would anticipate a lot of volatility in the next few days, as the central bank could either disappoint or shock the markets. That being said, it is anticipated that the central bank will raise interest rates by 25 basis points. Because of this, we will have to pay close attention to whether or not the central bank will not only hike, but whether or not they sound like they are going to continue to do so.

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