British Pound Slams Into 200 Day EMA Against US Dollar

The British pound has shot up in the air to reach the 200 day EMA against the US dollar on Wednesday, as we await the CPI figures on Thursday. That being the case, it does make a certain amount of sense that we would see a little bit of hesitation, not only due to the technical nature of the 200 day EMA, but also due to the fact that we have the CPI figures coming out which of course gives us a look at inflation. Ultimately, this is a market that has been very noisy as of late, due to the fact that the Bank of England suddenly seems as if it is going to tighten monetary policy, but we also have the Federal Reserve which is a bit of a wildcard, although we know they are getting tighter.

GBP/USD Video 10.02.22

To the downside, I think the 1.35 level will continue to be interesting, as it is a large, round, psychologically significant figure, and of course where the 50 day EMA currently sits. If we can break down below there, then the market is likely to go much lower. This would probably have something to do with the inflation in America are picking up quite drastically, which would have the Federal Reserve tightening much more aggressively than thought. Ultimately, I think this is a market that continues to be more volatile than anything else, so you need to be cautious with your position size. I do not think that changes anytime soon as we are all over the place around the world when it comes to risk appetite. If we can break above the recent highs, then we will more than likely go testing the 1.37 handle level next.

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