- The British pound traded quietly amid thin post-Thanksgiving conditions, with major technical levels clustering near 1.32.
- A decisive break on either side of this inflection zone could determine the broader trend in the weeks ahead.
The British pound has been somewhat noisy during the trading session on Friday as we continue to see a lot of technical factors come into the picture. Friday, of course, was a fairly quiet trading session due to the fact that although the Thanksgiving holiday was over, it's generally accepted that most Americans don't go back to work until Monday. So, because of this, you have an entire part of the world that isn't even involved in the markets.
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That being said, it's worth noting that the technical confluence is worth paying close attention to because it could matter. The 200-day EMA, the 50-day EMA, and the 1.32 level all come into play in this general vicinity. And if we break down below the 1.32 level, then I think we've got a situation where the market just simply rejected breaking above these crucial moving averages and broke above the idea of changing trends.
Critical Inflection Levels
If we drop from here, we could go to the 1.30 level given enough time. On the other hand, if we turn around and break above the 1.33 level, then we could go looking to the 1.35 level. But in that environment, I would expect not only the British pound to do fairly well against the US dollar, but multiple other currencies well, including the euro and the Canadian dollar.
In general, the British pound has made a massive topping pattern for most of the year. And now we are at a major point of inflection that will probably determine where we go for the next several weeks. Federal Reserve interest rate cut expectations continue to be very noisy. And it's worth noting that the market keeps fluctuating between an almost guaranteed rate cut to a lot of questions asked about that.
And it has a major influence on the US dollar.
Keep in mind that the Bank of England almost cut interest rates last time, and the vote count only reinforced the idea that perhaps the rate cuts are coming fairly soon. Now the question is how many times will they cut? I think this is a market that probably continues to be very noisy as both central banks are in play at the moment.
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