The British pound found buyers on Monday, once the Europeans had gone home. At this point, we are looking at a couple of major moving averages causing a touch of resistance.
GBP/USD
The British pound rallied a bit during the trading session on Monday to test the crucial 50-day EMA and the 200-day EMA indicators yet again. This is an area that has been important multiple times, but it's probably worth noting that the British pound didn't show any real strength until we got to the US session. That is because, typically speaking, as stocks on Wall Street start to rally, foreigners buy them.
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Whether that actually remains the case, the bullish pressure added remains to be seen, but we will have to watch if we can break above the 200-day EMA on a daily close. That could send this market toward the 1.34 level, possibly the 1.35 level. Short-term rollbacks, I think, will end up being potential buying opportunities, unless of course we break down below the 1.33 level. If we were to break down below the 1.33 level, then I think we would see follow-through to the 1.32 level.
Technical Outlook and Key Pivot Levels
It's worth noting that the British pound has outperformed its contemporaries for some time now, and I expect that to continue to be the case. What I mean by this is if the market does roll over, you probably get more mileage out of shorting something like the New Zealand dollar.
But if the US dollar starts to weaken, then the British pound might be the first currency traders look to buy, this and maybe the Australian dollar. All things being equal, this is a market that I think is on the precipice of making some type of decision. If and when we make that decision, then we know where we go next. It's a market that I am watching closely.
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