The British pound has gone back and forth on Wednesday, as the US interest rates continue to rise after the US attack on Iran.

GBP/USD

The British pound has gone back and forth during the course of the trading session here on Wednesday as we are hanging around the 50-day EMA. The 200-day EMA also offers a pretty significant barrier as well, so I think it does make a certain amount of sense that we find ourselves going back and forth.

What I do find interesting here, though, is that despite the fact that interest rates have climbed in the United States, the pound is slightly positive going into the end of the session. That makes a certain amount of sense due to the fact that UK rates are higher than most others, including the US, but I also recognize that we are in an area of high traffic.

The Pound as a US Dollar Barometer

I still like the idea of buying the US dollar in general, and I like the idea of using this market as a bit of a barometer of US dollar strength. If we start to fall apart here, that means we’re going to crater in many other markets, such as the New Zealand dollar, the Australian dollar, places that have no business strengthening against the US dollar in a strong greenback environment.

That being said, if this market does recapture the 1.34 level, then you would have to assume that the pound sooner or later tries to get back to the 1.35 level. When you look at the pound, we’ve been in a range since basically the spring of 2025, with a throw over in each direction, and right now we are trying to get to the middle, which would be the 1.35 level.

So, unless the US dollar really takes off against everything and there’s some type of massive risk problem out there, I do think eventually we will find our way up there. But I use this chart not to trade, but to decide what to do with the US dollar against so many other currencies. So, the pound is definitely something you want to be watching.

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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

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