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Christopher Lewis
GBP/USD

The British pound initially pulled back during trading on Thursday but found enough support at the previous uptrend line to rally again. However, we are still in the symmetrical triangle, despite the fact that the Bank of England decided to forgo rate cuts, which in theory should be bullish for this currency. With that being said, the market has shown quite a bit of resiliency, as we continue to bounce around in this area. If we can break out above the 1.3150 level, then the British pound is free to go much higher but right now it looks like the statement has caused a bit of confusion.

GBP/USD  Video 31.01.20

After all, the central bank stated that although it was putting rates on hold, Mark Carney believes that inflation will remain muted until the end of 2021 at the least. Because of this, that does open up the door to rate cuts down the road. In other words, it’s something that people will have to pay attention to. With this being the case, the market is probably going to continue to see a lot of volatility but ultimately it’s probable that we will see a lot of noise here, as the central bank hasn’t necessarily removed any concerns or questions when it comes to the currency and interest-rate policy going forward. It’s almost as if they simply punted, letting us know that they don’t really have any idea as to where inflation is going based upon the comments of various members. With that, it’s very likely that we continue to see mass confusion and therefore chopping back and forth as per usual when it comes to the British pound. The only thing we can do is wait to see if there is a breakout above the 1.3150 level, because it would be a clear break of resistance.

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