British Pound Breaks Down

The British pound has broken significantly during the trading session on Thursday as we now look like we are ready to go much lower. At this point in time, the US dollar continues to see plenty of bullish pressure. In fact, the British pound is almost like the last straw to give as we have seen the British pound has been so strong against the greenback previously, while other currencies were falling. At this point in time, that has obviously changed now that people are doing everything they can to get back into the greenback and away from anything remotely close to the idea of risk.

GBP/USD Video 28.01.22

Over the longer term, it looks as if the 1.32 level might be the target, but that does not mean that we get there overnight. Short-term rallies will be sold into, and therefore I think that the 50 day EMA at the 1.35 handle does offer a bit of a “ceiling” in the market at the moment. At this point in time, I would be selling on any signs of weakness, but that of course assumes that we get anywhere near there. Based upon the move that we have seen on Thursday; I do not necessarily see that being very likely. In fact, it would not be surprising at all to see this market break down below the bottom of the Thursday candlestick to continue to drop significantly.

All things been equal, I think you look to buy US dollars over the next several days against multiple currencies, not just this one. In fact, that might be the only trade at the moment: buying US dollars.

For a look at all of today’s economic events, check out our economic calendar.