- The British pound has been all over the place during the trading session on Thursday as we continue to wait for more US data.
- After all, the jobs number was hotter than anticipated during the Wednesday session, which sent the British pound and other currencies down against the US dollar.
Now on Friday, we have to keep in mind that the Consumer Price Index month-over-month figures will be watched, with Core CPI taking center stage, anticipated to be 0.3%. If it’s hotter than anticipated, that probably drives this pair down toward the 50-day EMA and the 1.30 level as well.
US Dollar Influence and Potential Scenarios
Any rally at this point in time could open up the possibility of a move to the 1.3750 level, and that could be kicked off by a weaker than anticipated CPI number. But really at this point, I think you have a situation where the British pound is still going to be a little bit more resilient than many other currencies against the greenback and any strength that the greenback has.
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But I also recognize that the US dollar is the currency that you have to get correct, not necessarily the pound. After all, all of the majors are driven by what’s going on with the greenback, and it does look like the US dollar is trying to fight back. If we do break out to the upside above the 1.3750 level, then it could kick off a longer-term move to the upside, which would be a continuation of the overall pattern that we had seen for some time. Breaking down below the 1.35 level could accelerate selling, and at that point, not only would we see the British pound fall against the US dollar, but I suspect you would see many other currencies follow suit as well.
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