- The British pound has shown itself to be somewhat strong during the trading session here on Thursday but has also given back some of the very extended gains for the session.
- So, I think at this point in time, we have to look at this through the prism of a market that may not be able to really make a decision quite yet.
- I think we are in a scenario where traders are looking at this through the prism of the weaker than anticipated inflation numbers coming out of the United States, which of course has people thinking that the Federal Reserve is not going to be able to keep rates as high as they are at the moment. And that has definitely made an impact on the US dollar.
Bulls? Are You Still There?
So, the question now is, can we continue to go higher? We are right here at an area that previously had been a bit of a headache. So, I think short-term pullbacks probably attract attention that people are willing to pay to the British pound. It’s been a fairly decent mover against the US dollar for some time now, even though it was falling, it was falling less than other currencies.
So, I would anticipate that the British pound probably continues to be a currency that should outperform the US dollar and outperform other currencies against the US dollar. That being said, we are a little stretched and it does look like we are going a little bit sideways more than anything else. So do keep that in mind. In this environment, I think the 1.35 level offers support down to the 1.34 level.
Underneath there you have the 50 day EMA. I don’t really have any interest in shorting this market, although I’m the first one to say that we are oversold in the US dollar. But the reality here is that we definitely see a bullish market, so drops have to be thought of as potential value.
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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.
