The British pound has gone back and forth during the course of the trading week against the US dollar, as the 1.37 level looks to be somewhat supportive. That being said, we gave back some of the gains to show signs of hesitation, and therefore it is very likely that we will see a lot of noisy behavior in the short term. With that, the market breaking above the 1.39 level could get things moving rather quickly. By doing so, then the market is likely to go looking towards 1.40 handle.
GBP/USD Video 25.10.21
To the downside, if we break down below the 1.37 handle, then we are very likely to go looking towards the 1.35 level. Breaking that would change the entire complexity of the market and by extension the trend. We have been trying to recover for some time, and the Bank of England is likely to raise interest rates that of course does help the British pound in general and is something that must be paid attention to. Because of this, it will be interesting to see how the next couple of weeks play out, but we are most certainly at some type of inflection point.
The US dollar will have its part of play as well, as we have seen so much in the way of running away from it. The market continues to see a lot of noisy behavior, but at the end of the day, the US dollar is the one thing that you have to get correct. If the US dollar falls in value, that will propel the British pound much higher. On the other hand, if the US dollar suddenly strengthens, that could bring this market much lower.
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This article was originally posted on FX Empire