- The British Pound has gone back and forth during the course of the trading session on Friday, as it looks like we are trying to sort out whether or not the 1.26 level will matter.
- This is a pair that I think is worth watching because we had recently just a couple of days ago, tested the 200 day EMA and found it to be too much to get beyond.
- And the fact that we have pulled back the way we have suggests also that we could drop down to the 50 day EMA underneath.
After that, then we have the 1.25 level that I think you would have to watch. Keep in mind that the US dollar has been beaten upon by the British pound for some time now. And any sense that we go back to the previous trend would catch a lot of people off guard. In that scenario, you could see a rather explosive move.
More Tariffs? UK Might Skirt the Biggest Issues.
Keep in mind that Trump is still looking at punishing most of the trading world via tariffs as American interests now lie in the idea of reciprocal tariffs, leveling the playing field that of course is going to have a major influence on many countries around the world. But Great Britain is a little bit of an outlier. So, I do think that if the US dollar starts to strengthen quite drastically. This will be very much like six months ago when everything else was falling apart, the British pound was just gradually drifting a little bit lower. I don’t expect a huge move in this GBP/USD pair, but I do expect the US dollar to behave the same here as it will in other places, with maybe the exception of Canada and Mexico, which are particularly vulnerable right now.
Having said all of this, it is interesting to note that the 200 day EMA caused a lot of resistance. If we were to break above the shooting star from the Wednesday session, then that opens up a challenge to the 1.2750 level. A move above there really could change things, but right now we’re still in that area of confusion as we are between the 200 day EMA and the 50 day EMA. So, I think a lot of sideways and choppy action is probably what we’ll see over the next couple of days.
Ready to trade our daily Forex GBP/USD analysis? We’ve made this UK forex brokers list for you to check out
