British pound rocketed higher on Tuesday as we continue to see the US dollar weaken at the moment.
GBP/USD
British pound rocketed higher during the trading session on Tuesday again as we are now threatening the 1.38 level. This, of course, is an area that has been very difficult to break above in the past, so it will be interesting to see how this plays out. I do believe that we are at an area that could be thought of as a potential ceiling in the market, but we would need to see some type of dollar-positive type of turnaround.
With that being the case, the markets are likely to continue to see a lot of chop, a lot of questions asked of the US dollar. Quite frankly, despite the fact that this pair has been so strong, there are questions about what the Bank of England will be doing going forward. Yes, they are cutting, but they are somewhat hawkish in that cut in the sense that they may have to sit still for a while.
Top Regulated Brokers
Market Potential and Key Levels
This being the case, I think you have a situation where the British pound outperforms many of its contemporaries against the US dollar. The reason I watch this chart so closely is that if they do in fact start to see selling pressure over here, then you could see this market drop down to the 1.35 level. The 1.35 level, of course, is a large, round, psychologically significant figure that would attract a lot of attention.
On the other hand, if the British pound takes off above the 1.38 level, we could be looking at 1.40 pretty quickly. This has been a big winner, but the ironic thing is all it would take is a couple of words from a central banker about the likelihood of cuts or how inflation seems to be cooling, and you would see a 150-pip drop pretty quickly.
Ready to trade the Forex GBP/USD analysis and predictions? Here are the best forex trading platforms UK to choose from.