The British Pound has fallen a bit during the trading session on Tuesday as we continue to see a lot of noise in the currency markets.
The US yields have risen quite a bit during the trading session on Tuesday while the British Pound and its interest rate markets have been a little softer.
Nonetheless, the GBP/USD market is sitting right at the 200-day EMA, and it certainly looks like it is trying to set up the next move.
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The 200-Day EMA and Key Levels
The 200-day EMA being broken below opens up the possibility of a drop down to the 1.33 level, which is a large, round, psychologically significant figure.
To the upside, the 1.35 level is an area that I think a lot of people will be seeing as a potential target as well.
We're basically in the middle of all of that, and I think we have to look at this through the prism of a market that's trying to find its balance, and it might just be these 200 pips.
The 200-pip range would be typical for this market and at this point in time, despite the fact that the British interest rates are higher than the American ones, it's not a massive differential.
It's about 50 basis points, so it's not enough to truly move the markets.
But all things being equal, it does make the pound a little bit more attractive than many other currencies.
If we were to break down below the 1.33 level, then it's likely that the British pound is just following everybody else against the dollar.
It's probably a situation where it's all about US dollar strength on the whole, not so much about British pound weakness.
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