- The British Pound has gone back and forth during the trading session. On Wednesday, as the core CPI numbers out of the United States came in at 0.4% instead of the expected 0.3%.
- Because of this, the market is likely to continue to see a lot of choppy and uncertain behavior, because it puts the entirety of the Federal Reserve's interest rate situation at risk.
- Traders started to think that perhaps the Federal Reserve might loosen monetary policy later this year, but with inflationary numbers being as sticky as they are, it's very difficult to imagine that happening.
Technical Analysis
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Ultimately, when you look at the technical analysis, we are still very much in a downtrend, and the 50-day EMA sits just above and near the 1.25 level. The level of 1.25 has been both support and resistance multiple times in the past, so I don't think it's very surprising that it could be an area of interest right now.
If we were to break above 1.26, then you can start to talk about a potential trend change. But right now, I think we're just stuck in the same pattern that we've been in for a while with 1.25, a bump being a bit of a ceiling and 1.2350 level underneath being a bit of a floor. We have a little bit of sideways action, maybe some short-term range-bound opportunities present themselves for those who are a little bit more short-term inclined.
Overall, though, I still think you have a scenario where the US dollar remains fairly stout and rallies at this point in time I just don't trust. Things can and will change, but keep in mind the Bank of England just cut interest rates and even had a couple of members on the Monetary Policy Committee suggest that they were ready to cut 50 basis points instead of 25.
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