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Christopher Lewis
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GBP/USD

The British pound rallied a bit during the course of the week to go looking towards the 1.42 handle, an area that has been resistance more than once. That being said, the market is likely to continue to look at that area as a bit of a barrier and perhaps even a bit of a challenge. If we can close above there, then I think that the British pound goes looking towards the 1.45 handle, based upon the longer-term charts. That is an area that has been important in the past as well, and of course is a large, round, psychologically significant figure.

GBP/USD Video 17.05.21

Underneath, I still see the 1.3750 area as important, and even more important than that for the shorter-term is going to be the 1.40 handle, which of course is a large, round, psychologically significant figure, and an area that we just broke out of. I think that you probably have to go looking towards the shorter-term charts to play the longer-term trade, looking for signs of support on pullbacks. I would be especially interested near the 1.40 handle, but if we break the 1.42 level then it appears that you would have to play the momentum trade.

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A lot of the noise during the week was due to inflation numbers coming out of America much hotter than anticipated, but quite frankly the Federal Reserve is light years away from tightening monetary policy, so I think it is only a matter of time before we surge much higher as the greenback will almost certainly be punished.

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

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