- The GBP/USD has done very little during trading on Thursday, but it has shown itself to be somewhat resilient.
- The 200-Day EMA’s is just below the candlesticks from both Tuesday and Wednesday and seems to be offering a short-term support level.
- Furthermore, we have been in an up-trending channel, so one would have to think that sooner or later buyers would return based on that reason alone.
However, it is probably worth noting that the market has been very noisy and choppy, so it’s not like it’s been a massive bullish run as of late, it’s been more or less a grind. Traders are trying to figure out whether the Federal Reserve is going to back off the markets, meaning that they are trying to figure out whether Jerome Powell is going to sound more hawkish or dovish over the next couple of weeks.
Waiting for the CPI Numbers
Keep in mind that the CPI numbers coming out on Friday will have an influence on where we go next, as it could give us a bit of a “heads up” as to what the Federal Reserve may or may not have to do when it comes to the interest rate decision and of course monetary policy. Inflation is by far the biggest concern that most people have at the moment, although most people believe that we have Artie hit “peak inflation” in the United States. If that is in fact the case, but it’s possible that we may see the US dollar continue to drift lower, all things being equal.
However, we also must worry about the fact that the global economy is slowing down, and typically in a recessionary environment, people look to the US dollar for safety. With that being the case, we have to question whether or not the British pound can continue to rally the way it has. After all, Great Britain is certainly going into a recession, with the Bank of England already suggesting that a two-year recession was on its way. In that scenario, it’s difficult to get overly bullish on the currency, even though the central bank is tightening into that very same recession. With that being said, I would be cautious but if we broke down below the 200-Day EMA, may be time to start selling again. On the upside, the 1.25 level makes for a juicy target.
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