- The GBP/USD has shown signs of hesitation during Wednesday's trading session after initially trying to rally.
- The market is expected to see a lot of back-and-forth noise, and it may go looking to the 1.2550 level as support, which was the previous resistance. This move makes sense given that the market broke out of a previous consolidation area.
- The 50-Day EMA is situated just below the support level of around 1.2350, which was also the bottom of the consolidation region that the market just escaped.
On the upside, the market is likely to continue looking at the 1.2750 level above as a potential target and barrier. If the market manages to break above that level, the next target will be the 1.30 level, a large, round, and psychologically significant figure that has been important in the past.
The market is expected to be noisy due to the upcoming interest rate decision coming out of England in the next few days and the Federal Reserve staying tight with its monetary policy. The British pound has been one of the better-performing currencies against the US dollar this year, but whether that continues or not remains to be seen. The market is expected to be difficult to trade, and a big decision needs to be made soon. We will likely get more clarity on the market direction by the end of the week.
Keep Your Position Size Reasonable
It's worth noting that there are reasons to suspect that there might be enough fear out there to drive money back into the US dollar, but we need to see momentum pick up to the downside before making such a move. As for now, it's best to stay cautious and keep position size reasonable.
In summary, the British pound has been experiencing choppy consolidation, and the market is expected to see a lot of back-and-forth noise. Support is expected around the 1.2550 level, with the 50-Day EMA situated just below the support level. The market will continue to look at the 1.2750 level as a potential target and barrier. The upcoming interest rate decision in England and the Federal Reserve staying tight with its monetary policy will continue to cause volatility in the market. The British pound has been one of the better-performing currencies against the US dollar this year, but the market remains difficult to trade. It's best to stay cautious and keep position size reasonable.
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