- The British Pound initially rallied during the trading session on Monday, but you can see that we have sold off since then.
- That being said, it’s no surprise given the circumstances—markets are bracing for Wednesday’s FOMC meeting, which will heavily impact the US dollar, followed by the Bank of England’s interest rate decision on Thursday, a key driver for the British pound.
- We are extended at this point, and we are at an area that has been important multiple times.
So, because of this, I think you've got a situation where perhaps we're due to a pullback. On the other hand, though, if we can clear the 1.35 level, that would be a very, very strong signal that the British Pound is going higher or at the very least the US dollar is selling off. Keep in mind that the move has been so parabolic, you'd almost have to bet on the downside based on that.
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I think the end of this week will be really what matters. We'll see how traders feel about the British Pound as we get closer to the end of the week as both central banks will have come and gone. There are a lot of concerns about global trade and of course that's an issue, but we also have to worry about the tariffs and what they're going to be.
Now, I don't think it necessarily affects this pair specifically, but it does affect the US dollar and that's part of what we are seeing. So, with this, I think you've got a scenario where traders continue to watch the 1.34 level with great interest, seeing whether or not it is going to end up being a ceiling.
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