GBP/USD – Can it break 1.37?

A major barrier of resistance

The next week could be really interesting for cable, with the Fed and BoE being among the two most aggressive central banks and inflation in both countries continuing to rise rapidly.

The pair ran into resistance last month around 1.37, where the 200/233-day SMA band crossed the 50 fib level to provide a considerable barrier of resistance.

It’s been on the rise again over the last couple of weeks but the past five days has seen more volatility than direction. Both countries are seeing high inflation and five or six rate hikes are already priced in for the central banks. The question is how much further it can go?

The recent trend has been bullish and if that continues, 1.37 will once again be key for the same reasons. A move above here would be extremely bullish , with the next test coming around 1.3834 – prior high and 61.8 fib level.

Equally, a rotation lower could also send a strong signal, especially coming ahead of the previous high.

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam