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MENAFN- Daily Forex)
British Pound has struggled a bit during the day on Wednesday as we tried to break above the 1.2350 level but have turned around to show signs of exhaustion. Ultimately, this is an area that previously had been support and now it is offering resistance. A little bit of market memory probably goes a long way here and we'll have to wait and see whether or not we break down below the lows of the trading session on Wednesday. If we do, it opens up the market for a move back down to the 1.21 level, which is the bottom of the previous consolidation. This is an area that I think a lot of people are paying close attention to because if we were to break down below the 1.21 level, it could send the British pound plummeting.
Breaking Higher?
We could also break above the highs of the trading session on Wednesday and go looking to the 1.25 level where I think you probably see even more resistance. Not only is it an area that historically has been important, but it's a large, round, psychologically significant figure, and it's also an area where you start to see the 50 day EMA come into the picture. Both of those could cause issues, and therefore it's really not until this situation becomes clear that I would start to think about buying the British pound. Also, quite frankly, I would have to see the US dollar struggling elsewhere. If it was just a British pound thing, then, more likely than not, I would take that move and start buying pounds against something like the Swiss franc that is currently struggling. The market continues to be one that will have to pay close attention to interest rates in America and of course the whole idea of tariffs. But in this environment, I think the US dollar will still be one of the strongest currencies out there and it will clearly show itself in this currency pair as it has been extraordinarily negative. It is worth noting that the 1.21 level is an area that goes all the way back to March of 2023 as support. So, it will take something rather aggressive to break down below there, but now it looks like we're just simply running out of momentum.
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