- The GBP/USD has fallen during the trading session on Thursday, as the Bank of England continues to see headwinds down the road.
- Furthermore, we’ve had a couple of other central banks in the last 24 hours report, including the Federal Reserve and the European Central Bank.
- After all that, we have seen the British pound take a little bit of a beating, which is in direct conflict with other currencies against the US dollar in general.
At this point, it is interesting to see how this market is behaving, because we could be in the throes of a potential double top. The 1.25 level has been very difficult to overcome, and I think that will probably continue to be a major issue. If we were to break above the 1.25 level, that would obviously be very bullish, but it’s clear that we are continuing to struggle, with the British pound being one of the weaker currencies in the world right now.
I’ll Watch the Pair Closely
The 50-Day and the 200-Day EMA indicators are sitting just below, so if we were to break down below there, then it’s possible that we could go to the 1.20 level underneath. The 1.20 level is obviously a large, round, psychologically significant figure, and therefore you need to understand that the order flow may be a bit noisy there. On the other hand, if we were to break above the 1.25 level, we probably could investigate the 1.26 level, and then eventually the 1.30 level after that.
While the US dollar is rather weak, it’s saying that the British pound has been absently crushed against most currencies during the day, and of course, we’ve seen a bit of a “brick wall” in this general vicinity. If the US dollar suddenly strengthens against other currencies, it could be brutal when it comes to this pair. I’ll be watching this pair closely because if we suddenly get a ride back to the greenback, I’m going to get aggressively short. If we break down below the most recent swing low, it fires off a major “Emma pattern”, and could lead to the British pound going down to the 1.15 level over the longer term. Anything is possible on a Non-Farm Payroll Friday, so be cautious and keep your position size reasonable.
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