British Pound Testing Trendline on Weekly Chart

The British pound has fallen a bit during the course of the week, after initially trying to rally. The market formed a couple of shooting stars during the course of the week which of course brings in fresh selling, so be interesting to see how that plays out. All things being equal, this is a market that I think will continue to see a lot of noisy behavior, but at the end of the day I do not necessarily think we are quite ready to make a move yet. At this point, if we break down below the 1.35 handle, then I think the longer-term traders will continue to push this market around. At that point, we could very well go looking towards the 1.32 level again.

GBP/USD Video 24.01.22

Keep in mind that the US dollar of course is a safety currency, and we have higher interest rates in America. However, this is only part of the story, because quite frankly people are trying to get away from any type of risk in general. All things been equal, the market seems to have a significant amount of resistance near the 1.37 level, which is an area we have seen a lot of resistance as of late, so breaking above there, the market then could go much higher at that point in time, perhaps reaching towards the 1.4 level over the longer term. All things being equal, I do not see that happening anytime soon, unless of course something changes fundamentally. The fact that everybody is freaking out at the same time almost certainly put a lid on that type of move.

For a look at all of today’s economic events, check out our economic calendar.