- As you can see, the British Pound has pulled back just a bit during the trading session on Thursday as we continue to dance around the 1.30 level.
- The 1.30 level is an area that a lot of people would be looking at as the level has previously been resistance and support.
- So, with this being the case, I think you've got a situation where all this market memory should come into the picture to support the British pound.
Keep in mind, the markets will continue to look at this through the prism of what the Federal Reserve is doing more than anything else. As a result, I think you've got to look at this as a potential buying opportunity, but if we were to break above the 50 day EMA, then it's possible that the market could go looking to the 1.33 level. At this juncture, I don't have any interest in trying to short this pair, although I recognize that the market is probably going to continue to be noisy, and we could very well break down below the 1.30 level.
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I am Not Keen on Shorting the Pound
But in this scenario, I would be more apt to buy the US dollar against something else, not necessarily the British pound itself. If we do break above the 50 day EMA, then I think a move to the 1.33 would also open up the possibility of other currencies gaining against the green bank.
The British pound has been one of the better performers and that's not a huge surprise considering that the interest rate differential is essentially nil between England and the United States. Unlike other currencies like the Euro or perhaps a Canadian dollar, this is a pretty equal fight when it comes to that. So, pay attention, this is probably all about risk appetite at this point
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