The British pound initially fell a bit against the US dollar as the markets tried to price in a massive escalation of the war in Iran.
GBP/USD
The British pound initially fell a bit against the US dollar during the trading session here on Monday but found buyers again near the 1.33 level. The 1.33 level is significant support that extends all the way down to the 1.3250 level.
If we turn around and rally from here, the 1.34 level is a slight barrier, but breaking above that opens up the possibility of a move to the 50-day EMA, which is right at the 1.35 handle. If we were to break above there, then the market is likely to continue to go higher, perhaps reaching the 1.36 level and then the 1.37 level.
The British pound is a little bit resilient in the sense that the Bank of England is likely to be hesitant to cut rates rapidly. If that is going to be the case, then it is probably going to outperform many of its compatriots and peers against the US dollar.
Rangebound and Global Headlines
I think we are basically rangebound. With this being the case, I think we probably see a little bit of resistance near that 1.35 level.
Ultimately, I believe that this remains a very noisy market and possibly rangebound, driven unfortunately by global headlines that really have nothing to do with Great Britain. But at the end of the day, this is the world we are in.
It all comes down to what is going to happen in the Persian Gulf. Risk on, we probably have the pound rally. If we get risk off, then it is the other way around. This is a fluid situation, so the most important thing you can do is keep an eye on your position size as the volatility probably remains a major threat.