- The British pound did fall during the day on Friday as we continue to see a lot of noisy behavior.
- That being said, the market is likely to continue to look at the 1.3650 level above as a major barrier.
- If we can break above there, then I think we have a lot of buyers coming back into the picture and pushing the British pound to the 1.40 level.
That being said, the market is likely to see a lot of noise in this area. And I do think we continue to consolidate between 1.34 at the bottom and 1.3650 on the top. So, with that being the case, I think you’ve got a scenario where we just go back and forth, but I’ll be watching the 1.34 level for a potential breakdown. If we break down below there, then we could go look into the 50-day EMA.
On a move to the upside, breaking above that 1.3650 level, again, I think you see the British pound going looking to the 1.40 level. In that environment, I would anticipate that the US dollar is selling off everywhere.
US Dollar Strength
However, it’s probably worth noting that the US dollar strengthen against everything due to better than anticipated jobs numbers coming out of America. So, it’s very possible that we are getting close to seeing the end of US dollar selling, especially with the massive amount of increase in rates that I have seen over the last couple of weeks.
At this point in time, I anticipate that we see a lot of sideways action, but overall, I think there is still a lot of overhang when it comes to this market, as we had gotten a little bit ahead of ourselves. Ultimately, this is a pair that I’ll be watching very closely, because it could give us a bit of a “heads up” as to how the US dollar will behave overall.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.