- The British pound has shot higher against the US dollar during the trading session here on Wednesday, as there are a lot of cross currents right now causing chaos in the market. All things being equal, it is worth watching the 1.35 level above as a potential barrier that must be addressed.
- In general, I believe that if we break above the 1.35 level, then we probably have another 150 pips waiting to appear as buyers will become a little bit more aggressive.
- If the market were to pull back from here, then the 1.32 level is your next major floor, especially with the 50 day EMA approaching that level.
If we were to break down below the 1.32 level, then I think the US dollar probably strengthens not only against the British pound, but multiple other currencies out there as well. I do not think that this is a market that you want to get too large in as far as position size is concerned, because quite frankly, it can explode in one direction or the other in the type of environment that we find ourselves in.
The overall market attitude has been very negative U.S. dollar for a while. And I think that is something that you need to be cognizant of. Despite the fact that I see this as an area that is very difficult to overcome. The reality is that we have been grinding higher for a while and the market will do what the market will do. There are some concerns about the U.S. bond market now and especially after the 20 year auction on Wednesday, but you can say that about multiple bond markets. So, I think the world is going to get really interesting here. Make sure you protect your account.
Ready to trade our GBP/USD Forex analysis? Here are the best regulated trading platforms UK to choose from.
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
