- The GBP/USD currency pair has had a bit of a quiet session during the day on Monday, as we continue to see a lot of hesitation around the 50-Day EMA.
- The British pound has been straight up in the air for a while, so it does make a certain amount of sense that we would take a bit of a breather.
- After all, there are a lot of concerns when it comes to the British pound as the British economy almost certainly is going to head into a major recession.
GBP/USD Technical Scenarios - Pullback More Likely
Keep in mind that the British pound may be shunned for the safety of the greenback in general. The fact that we are pulling back from the 200-Day EMA does suggest that perhaps this is an area that matters, and therefore a failure at this point should not be a huge surprise. Having said that, there are a couple of support levels underneath it you will need to be paying attention to. The 1.18 level is an area that comes to mind almost immediately, as it has been important a couple of times. Breaking through that opens up the possibility of a move down to the 50-Day EMA which is just below the 1.16 level. Underneath that, then you have the 1.15 level after that. The 1.15 level has been important a couple of times, so it makes a lot of sense that the market would be attracted to it.
On the other hand, if we take out the 1.22 level above, then you could see the British pound really start to take off. A lot of this will come down to the Federal Reserve and what it is they are getting ready to do, because people will be paying close attention to the Core PCE numbers coming out this week, a favorite inflation measure for the Federal Reserve. Beyond that, we have the job summer on Friday so that obviously has a certain amount of influence as well, so keep that in mind and understand that a lot of traders will be trying to reposition themselves at the end of the week so therefore it could be rather noisy. That being said, it looks like a pullback is somewhat imminent, at least for the short term.
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