GBP/USD Forecast Today 05/06: Pound Stays Rangebound

(MENAFN- Daily Forex)

The British pound rallied initially on Thursday but has struggled at the 50-day EMA. This is a pair that I think makes quite a bit of sense that it goes sideways as the Bank of England is very tight with its monetary policy. And while it does offer a higher interest rate than the United States does, it's not really by much.

So, with that being the case, I think you've got a scenario where it probably favors the overall rising of the British pound against the US Dollar but only to a point. With that being the case, I look at this as a market that probably will remain fairly quiet and fairly noisy, but I also recognize that traders are looking at this through the prism of whether or not we can break out above the 1.35 level.

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After all, the 1.35 level is an area that I think continues to see a lot of resistance but clearing that could open up a move all the way to the 1.36 level. Pulling back from here, I see support at the 200-day EMA, and, in fact, we saw that during the day on Thursday.

But even if we break down below there, the 1.33 level is also a bit of a floor. I suppose I am mildly bullish of the British pound, but the keyword here would be mild. I don't think it's going to rip to the upside, but it will outperform other currencies against the greenback, all things remaining equal. At this point, I like buying dips for short-term moves, but I think we are still essentially“stuck in a range.”

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