The British pound fell to kick off the trading session on Thursday as interest rates in America climbed, but we've seen a reversal in the interest rate markets and that of course has helped the British pound against the US dollar.
Ultimately the area below the 200-day EMA, I think, remains very well supported. At this point, if we break above the 50-day EMA, the market could go looking to the 1.3550 level.
All things being equal, this is a market that I think remains very noisy and choppy, and I think it also continues to see a lot of erratic behavior on short-term charts.
Ultimately, I think this is a market that is interesting to watch because the United Kingdom is one of the few places where you get a positive swap trading against the US dollar. Now, having said that, it's not a huge differential and I don't think it's enough to really move the market by itself, but it is a little bit of an outlier in that sense.
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Signs of US Dollar Weakness
The US dollar with higher rates of course has been like a wrecking ball with many other currencies. This one might be different. If we do rally from here, and I suspect we probably will eventually, the British pound will probably be the first place you see US dollar weakness.
If we break down from here, the 1.33 level has offered support right along with the 1.3250 level. Ultimately, I like the British pound, but I also recognize there's a lot of headline risk out there from the Middle East, and concerns about the energy markets and supply chain remain an issue.
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