The British pound against the US dollar got a lift-off yesterday when the employment statistics were released by the Office for National Statistics. They showed that the unemployment rate was down more than had been expected. In addition, while average earnings came in on target, average earnings including bonuses were up 2.9% as against 2.5% expected and 2.4% in the prior period.
The market reacted immediately, as can be seen on the 30 minute chart above. The GBPUSD pair started moving up rapidly and only came to a stop when it met a significant resistance level from the perspective of Technical Analysis (TA).
200 Day EMA creates a barrier – will the FOMC meeting outcome cause a breakthrough?
The resistance in question was in the form of the 200 Day Exponential Moving Average (EMA). This particular indicator is very closely watched by a great many market participants, especially when it is on the daily chart. It does not always cause a reversal, but it can, and nearly always holds things up for a bit.
Of course, the answer to the question of whether or not the pair will now move through this resistance, or fall back in its tracks, will depend a great deal on the outcome of that FOMC meeting in the US that will conclude later today.