GBP/USD Technical Analysis

The British pound is a little bit different in the sense that it continues to try to rally, but it can’t quite hang on to gains. The 1.34 level seems to be a significant barrier. If we can get above there, then it opens up the door to the 1.36 level, although I don’t think it’s a clean and easy move. If we pull back, then the 1.32 area and the 1.3250 area both offer support.

While keeping in mind that the Bank of England is expected to cut rates this month, it will probably have more to do with the press conference in the United States and what they say, mainly because the interest rate differential will essentially be the same at the end of the month and of course markets will be looking forward to try to figure out which one strengthens or weakens.

EUR/GBP Technical Analysis

The euro initially fell against the British pound but has recovered a bit as we just hang around this 50-day EMA. The 0.8750 level is an area that had previously been resistance, so it makes a certain amount of sense that it offers support. That being said, this is a market that had reached a major resistance barrier on longer-term charts and now has pulled back. If you squint, you can make out some type of complex head and shoulders, but really, at this point, I think we’re just kind of waiting around for some type of external news, probably the Bank of England and its statement at its interest rate decision later this month.

That could, in fact, strengthen the euro, or perhaps the Bank of England sounds a little bit more standoffish and maybe a little hesitant to go into a full rate-cutting cycle. And that could turn this pair right back around. The next couple of days are probably pretty choppy, though.

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