- The British pound tried to continue to look bullish during the trading session on Monday but found the area above the 1.3550 level as resistance, and we have in fact turned around to show signs of US dollar strength.
- Because of this, there might be some questions about whether or not something is changing, but at this point I think it is a little early to have that conversation.
- After all, the British pound has been extraordinarily strong for some time, but it would not be a huge surprise to see this market roll over and try to get back down to the 50 Day EMA as the rally was too strong in such a short amount of time.
Technical Analysis
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The technical analysis for this pair is obviously bullish as of late, but it is worth noting that the area near the 1.3550 level has been a bit of a brick wall with the exception of late June. The question now is whether or not we can continue to go higher, because quite frankly it has been worth noting that sellers have been aggressive. If we were to break down below the 50 Day EMA, then we could see further selling, perhaps sending the British pound down to the 1.3250 level, maybe even as low as the 200 Day EMA.
Alternatively, if we were to break above the 1.36 level, then we could see another attempt to get back to the 1.38 level, but I think you would also need to see the US dollar struggle on the whole. After all, if you can get an idea as to where the US dollar is going against major currencies, you will see quite often it moves in the same direction. It is worth noting that the British pound has been one of the big winners against the US dollar, so if we start to see movement here, then it probably will transfer into other USD related currency pairs. At this point, I think a pullback makes the most sense.
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