- The GBP/USD continues to hang around the 1.15 level, as Friday was very quiet.
- It does make a certain amount of sense that we would see this as a scenario where we are trying to figure out whether we are hanging around the 1.15 level.
- The 1.15 level is an area that has a lot of interest attached to it, and it is of course a large, round, psychologically significant figure.
Looking at this chart, the 50-Day EMA sits just below, and I think it’s very likely that we will continue to see the 50-Day EMA being paid close attention to by technical traders. The one thing that is worth noting is that this is the first time we have been above the 50-Day EMA for ages, so it is a little bit different than it had been previously. However, there is also a significant downtrend line that we have pulled back from, and therefore I think it’s worth noting that even though we have broken above that moving average, it is somewhat limited in its meaning, at least so far.
Insane Volatility Ahead
If we were to break above the 1.16 level, then it’s possible that the market could go much higher. In that scenario, I suspect that the 1.17 level will be the next target, and then the 1.12 level after that. The 1.12 level is an area where I think you will start to define the trend in other terms if we break above it.
The big question now is going to be what the market does after the Federal Reserve meeting next week. The interest rate hike is pretty much expected, but the question at this point is going to be with the statement is like afterward. If the Federal Reserve sounds like it is going to continue to be very hawkish, that will almost certainly work against the value of the British pound, or perhaps better put, increase the value of the US dollar. It does make a certain amount of sense that we are simply hanging around this area, because there are a lot of questions to ask at this point. I suspect the first couple of days for next week will probably be relatively quiet, followed by insane volatility. I still favor the downside, but we are clearly pressing the outer range of negativity.
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