- The British pound rallied early Thursday following the Bank of England’s decision to hold rates, but the overall trend remains bearish.
- Resistance sits near 1.32, with downside risks below 1.30 potentially extending toward 1.2750.
The British pound has rallied significantly during the early hours on Thursday as the market reacts to the Bank of England and its interest rate decision, which was to keep things as they were. However, it’s also worth noting that the Bank of England is narrowly maintaining its stance. With that being the case, I believe we are still very much in a downtrend, and I’ll be watching the 1.32 level for potential resistance. That area had previously acted as support, and the 200-day EMA moving toward that zone also adds to the resistance that we could see on any attempt to break higher.
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Ultimately, this move looks like a rebound from the 1.30 level, a large round number with psychological significance that attracts plenty of market attention. If and when we break down below 1.30, the British pound will likely target the 1.2750 level. Conversely, a break above the 200-day EMA, currently at 1.3265, might signal a recovery, though it’s important to remember that we remain well below that moving average, and this is what some people will look at to determine the longer-term trend in a market.
The 50-day EMA is now dropping sharply toward the 200-day EMA, setting up the possibility of a “death cross.” The prior uptrend line has been broken, retested, and then followed by another sell-off. All things considered, this is a market where traders are likely watching for signs of exhaustion to start selling into. While the pound’s reprieve for the day may draw attention, it doesn’t change the overall downward trajectory of this currency pair.
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