The British Pound Tries to Recover

The British pound has initially fallen during the trading session on Monday to dip towards the 1.30 handle, before turning around and rallying. At this point in time, the market looks as if it is a little oversold, so at this point, I think it makes a certain amount of sense that we would get a little bit of a bounce. The British pound has been viciously sold off over the last couple of weeks, so I look at this as a bit of a bounce that can be sold into eventually.

GBP/USD Video 15.03.22

If we do break down below the bottom of the candlestick, that could open up a rush of further selling, perhaps sending the British pound looking towards the 1.28 handle over the longer term. I do believe that eventually, the market needs a significant bounce, but whether or not it happens here or there is a completely different question. Regardless, any bounce at this point in time I think is limited to reaching the 1.32 handle, but if we were to break above there then you would have to take the recovery a little bit more seriously. All things being equal, I do not think that is likely, as the market has plenty to worry about, thereby making the US dollar somewhat attractive.

I do think that the choppy volatility will continue to be the main issue that we deal with, so therefore you probably need to keep your position size somewhat small until the market starts to move in your favor. At this point, I think it is obvious that there is plenty of downward pressure, but with the Federal Reserve having a meeting this week, anything could happen.

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