British Pound Attempting Recovery

The British pound has initially pulled back towards the 1.33 level during Asian trading but has since turned around to show signs of life again. Whether or not we bounce significantly might be a different question, but I think a bounce back into the consolidation area might make a bit of sense. This means that the market will probably struggle near the 1.3440 region, just as it has over the last three sessions.

GBP/USD Video 03.03.22

If we do break to the downside, meaning below the 1.3250 level, the British pound could find itself reaching towards 1.30 level over the next several weeks. While both central banks have relatively hawkish stances at the moment, the reality is that central banks may find themselves in the situation where they simply cannot tighten monetary policy if that does in fact end up being the case, it will be a simple matter of who blinks first in this currency pair.

If we do break out to the upside, the 1.35 level will be crucial in determining whether or not there is any wherewithal for the buyers. That would be the case, then we would probably have this market going towards the 1.3650 region next where the downtrend line currently resides.

I suppose if you asked me how I wished to trade this market, it would be simply fading rallies, selling signs of exhaustion as they occur on smaller time frames. Do not give me wrong, I do not necessarily think that the British pound is going to collapse, but I think the greenback is still in high demand against most currencies and that will have a little bit of carryover into this market.

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