• The British pound rallied slightly during the trading session on Tuesday as we continue to threaten the 1.35 level.

• The 1.35 level is a large, round, psychologically significant figure that a lot of people will be watching very closely, and if we can break above there, it would be a very bullish sign of momentum.

  

• If we break out above that level, then I believe the 1.36 level is your next target.

The GBP/USD market continues to be one where you look at short-term pullbacks for buying opportunities, especially near the 200-day EMA. The 200-day EMA at the 1.34 level is a floor in the market, and I think, all things being equal, this is a market that I think remains very noisy.

Market Choppiness and Interest Rates

But I also recognize that the choppiness makes a certain amount of sense considering that the markets are looking very much like one that still favors the British pound despite the fact that the US dollar is relatively strong. After all, you have the United Kingdom interest rates slightly higher than the United States, so this could open up a possibility of the markets just trying to grind a little bit higher.

I don’t think this is a big move waiting to happen, but short-term dips remain buying opportunities from what I can see. I have no scenario in which I am using this market for shorting opportunities. Quite frankly, if the US dollar starts to strengthen, I will probably buy it against other currencies, not the British pound at this point in time. The range has held, and will continue to at this point.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire