The British pound tried to rally early on Wednesday but gave back gains to keep within the consolidation area.
GBP/USD
The British pound initially tried to rally during the trading session on Wednesday but has given back gains to show signs of hesitation. With this being the case, the market is likely to continue to see a lot of questions asked of whether or not the British pound finds enough momentum to finally break above resistance.
The 1.35 level continues to be an area of significant selling pressure and of course we have the 50-day EMA sitting just below there so that it ends up being an area that a lot of people will be looking at very closely.
Market Uncertainty and Key Technical Levels
If we were to break above the 50-day EMA, then it's possible then the US dollar goes lower across the board but against the British pound this breach would open up 1.36. On the other hand, if we roll over and it certainly looks like we are going to at the moment we could test the 1.33 level again.
I think quite frankly most of the currency pairs at the moment are going to be very tightly wound just due to the fact that there are so many different headlines that could come across the wire at any given moment and therefore I think a lot of traders are very cautious about what to do with so much uncertainty.
Typically speaking, uncertainty does favor the US dollar but keep in mind that any signs of hope could turn things around for an end to the war maybe signs that the Bank of England may be able to cut rates and a whole host of other things.
Keep in mind that the Bank of England is thought to be on hold mainly due to energy inflation that could come into the picture. Ultimately, I think this is a range bound market that has about a 250-pip range and as things stand right now, we are just simply bouncing around.