The British pound has rallied during the Tuesday session, slamming into the 1.3250 area, an area that was previously support, and as of late, has been resistance.
GBP/USD
The British pound has rallied quite nicely during the trading session, but we are starting to see a very familiar resistance barrier come into the picture and cause some problems. This is an area that will continue to be watched very closely.
Ultimately, I think this is a market that will have to convincingly break above the 1.3250 level to really get momentum going. I think you've got a scenario where traders could be fading this market here but unfortunately it will be driven by the latest headlines and therefore, you'll have to keep your ear to the squawk that you use or any type of headline software.
The Interest Rate Situation in America
I think at this point in time the interest rate situation in America is probably paramount. We continue to see the 4.30 level defended and therefore if we can stay above there one would assume that should translate into a stronger US dollar.
If we were to break down below there then the British pound probably takes off. That could send the British pound to the 200-day EMA at 1.3368 and possibly even the 50-day EMA which is just above there.
The one thing that we do know is that it will be the latest headline that moves the market and it is difficult to anticipate what that headline may be because quite frankly it can come from Tehran, it can come from Washington, it can come from Tel Aviv.
With all of that being said I think you've got a scenario where you are at least looking at potentially fading this but if the war were to suddenly stop that would change everything.