The British Pound has rallied on Wednesday, as traders could continue to see upward pressure that we are trying to send this market to the next big figure.
GBP/USD
The British Pound has rallied a bit during the trading session on Wednesday as we are breaking above the 50-day EMA, as the couple of inverted hammers that we have formed earlier this week are looking to be a gateway to higher pricing. If we continue this type of pressure, ultimately this is a market that given enough time could go looking at the 1.37 area, maybe 1.3650. Either way, it does look like we are going to try to go higher.
Signs of exhaustion could still be selling opportunities, and we will have to watch the US dollar in general at this point. If it does start to strengthen, the British Pound of course has a certain amount of trouble, and I do think that risk appetite comes into play here. If we start to get more of a risk-off scenario, the British Pound could get hurt.
Bank of England and Interest Rate Cuts
Remember recently we have seen the Bank of England vote just 5 to 4 to keep rates where they were, so we are getting close to an interest rate cut. The question now is whether or not we are going to get several. I suspect that probably ends up being the case. In that environment, and if we get sticky US labor numbers, that could provide downward pressure.
In the short term, it certainly looks like the resiliency of the British Pound should not be ignored. Over the longer term, we will see. I think we are still in a state of flux here and I think there is a lot of noise to be had. I still like fading rallies; I just need it to get a little bit higher before we start to do that. As I recorded this video, it does look like a short-term rally is about to occur.