The British pound rallied significantly on Monday as we have seen a lot of volatility around the world.
It's worth noting that the British pound has found the 1.33 level of significant support as an area that of course is large round psychologically significant figure and it is an area that has been important previously.
Now that the GBP/USD pair is back above the 200-day EMA one would have to think that certain traders might be out there willing to get involved, but I would also point out that interest rates in the United States as well as Great Britain and other places are through the roof. The British pound of course is backed by a higher than usual interest rate and that has helped this recovery.
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Geopolitical Drivers and Market Volatility
The United States dollar could be bought into we'll just have to wait and see, maybe not so much in this pair as many others, but keep in mind that the war in the Middle East and the situation around the Iranians and the Americans continues to be a major driver of where rates go. Furthermore, the inconclusive attempt to finalize the war is a major problem as well.
With that being the case, the bond markets are just pricing in every panic attack that traders are having. Now that the Americans have given the Iranians yet again another deadline, traders will wait to see whether or not at the end of Tuesday if there are missiles flying in Iran.
At this point, there are a lot of concerns when it comes to the energy inflation in the United Kingdom as well as United States. And that of course is part of what's kept interest rates so high in London. I think the 1.3500 level above is probably your short-term barrier, so even if we do get a shot higher on Tuesday, I anticipate that's probably where you run.
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