The British pound has been somewhat noisy on Tuesday as we are looking at this market through the prism of a market that is at “fair value.”
GBP/USD
The British pound has been all over the place during trading here on Tuesday as we continue to squeeze right around the 200-day EMA. In fact, the 50-day EMA is here as well, so with all of that being said, I think we've got a situation where traders are looking at this as being essentially fair value between the 1.3250 level underneath offering support and the 1.3550 level above offering resistance.
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As we are basically in the middle of that, it's not a huge surprise to see that this market is likely to continue to just bounce around there. After all, this is a market that features 2 currencies that have a reasonably high interest rate attached to them, with the British pound actually being the bigger of the 2. This is why the British pound typically fares so well against the US dollar in comparison to some of its compatriots.
Key Technical Levels and Market Outlook
At this point, if we break down below the bottom of the candlestick for the trading session on Tuesday, then I suspect we will go visiting the 1.33 region again. If we can break above the high of the Monday candlestick, that could lead to a move to the 1.35 handle.
In general, I think this is a sideways range-bound market on short-term charts that traders will continue to take advantage of going forward until something structurally changes.
Right now, there's a little bit of positivity out there due to the idea that there might be a peace deal between the Americans and the Iranians that actually lasts. So, we'll see how this behaves, but right now we're just, I think, working off some of that volatility through calm, sideways trading.
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