British Pound Continues to Slump Against US Dollar

The British pound has broken down significantly during the trading session on Tuesday as we continue to wait for the Federal Reserve on Wednesday. That being said, the US dollar is starting to strengthen as we head towards the Federal Reserve meeting, as people are concerned about the hawkishness coming out of the central bank. Because of this, I think we will continue to see a lot of noisy behavior, but I would point towards the 1.35 level as short-term resistance, especially with the 50 day EMA sitting right there.

GBP/USD Video 26.01.22

On the other hand, if we break down below the lows of the previous two candlesticks, it is likely that we go looking towards the 1.33 handle, possibly even the 1.32 level, especially if we see the central bank out of the United States sound just as hawkish as they did previously. If that is the case, the markets will probably run towards the greenback overall. With that being said, I still look to fade the rallies unless Jerome Powell changes his overall outlook and statement. The downtrend line had previously been resistance, but you can see that we did break out above it for a little bit of a “throw over”, or “false breakout.”

When you look at this chart, you can see that we had been in a downtrend for quite some time, and now it looks very likely that we are going to continue to see some type of longer-term decision in the next few days. As there is quite a bit of panic out there, it still favors the greenback at the moment but things could change quite drastically Wednesday afternoon.

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