- The British pound has rallied rather significantly during the day, gaining 0.9% by midday in North America.
- It'll be interesting to see what happens next because the 1.27 level above is what I consider to be a significant barrier.
- If we can break above the 1.27 level, it's very possible that this pair goes another 200 pips to the upside.
On the other hand, if we fail here, then I think we just say that we are in a basing pattern. The US dollar has given up quite a bit of its gains over the last couple of days against multiple currencies, but I think part of this is just simply profit taking. After all, it was just about six weeks ago that we were all the way up at 1.3450 and dropped drastically, roughly a thousand pips.
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What I'm seeing with the US dollar is around the world. It's not just in the British pound, but it's also worth noting that the British pound for the longest time had fared better than many other currencies against the green bag.
Levels That Matter
The rubber meets the road here at the 1.27 level, so I will be watching it. And if we can get above there, then that 1.29 level comes into focus. But we also have the 200 day EMA and the 50 day EMA in that range offering a bit of resistance. If the market were to turn around and fall below the 1.25 level, then the 1.23 level gets targeted. But right now, that doesn't look very likely. What will be interesting to see is how this GBP/USD market behaves on Thursday, as it is Thanksgiving in the United States.
That might be part of what we are seeing here is that New York traders are covering shorts so that they don't get caught away from their desk with a big loser. So only time will tell on that, but I am watching these levels. There are some very clear levels in cable that will come to fruition here and influence where we go next.
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