The British pound fell early on Friday, as we are trying to determine whether or not we are going anywhere. Afterall, we have been in a well-defined range for a while, as both central banks are similar in their outlooks.
GBP/USD
The British pound initially fell during the beginning of the trading session here on Friday, but it does look like the 1.3250 level is going to continue to see a bit of support. Ultimately, this is a market that I think continues to bounce back and forth between two major levels of the 1.3250 level being a floor and the 1.35 level above being a major resistance barrier.
Ultimately, this is a market that given enough time probably will continue to look at the 200-day EMA as a bit of a magnet for price as we just go back and forth. The market breaking out of the range of course is going to be a big signal, but until we get some type of divergence between the central banks that I think we probably won't really move at all other than this 250-pip range.
Central Bank Divergence
Keep in mind that the Bank of England is likely to stay tighter for longer and of course the Federal Reserve is expected to as well, so with all of that being said I think we're just in a bit of an area of stasis.
If I had to give one of the currencies a little bit of a nod above the other it might be the US dollar just simply from a safety perspective and an energy perspective as the United Kingdom may struggle to find energy at least in an abundance here soon. That is an argument that we can have later, but right now I think it's obvious that we are just stuck.