The British pound has rallied significantly during the trading session again on Thursday as we continue to see the Pound recover. The 1.40 handle is of course a big figure that a lot of people will pay close attention to, as it will cause a lot of headlines. Furthermore, the market will more than likely continue to favor the idea of the US dollar softening unless of course we get some type of “risk off” scenario. After all, the US dollar is considered to be a massive safety asset, so it will be interesting to see how things play out over the next several days. That being said, if we can break above the 1.40 handle, it is likely that the market goes much higher, perhaps testing the 1.42 level again.
GBP/USD Video 30.07.21
To the downside, if the market was to show signs of exhaustion, we could drop down towards the 1.37 level underneath, which of course has attracted attention previously. The 200 day EMA is sitting in that same general vicinity, and therefore there could be a significant amount of support in that region. With that being said, it would not surprise me at all to see a little bit of a pullback simply because we are a bit overextended during the last two weeks or so.
All things been equal, this is a market that I think is trying to figure out where it wants to go longer term, but I would be a bit surprised if we simply slice through the 1.40 handle, because of the overextension. Ultimately, I do not think it would take much to have people push to the downside.
For a look at all of today’s economic events, check out our economic calendar.