British Pound Continues to Trade in Congestion

The British pound has pulled back a bit to kick off the trading session on Monday as the market continues to see the 1.32 handle as a bit of resistance. This is a market that is bouncing from a major support level in the form of the 1.30 handle, which of course is a large, round, psychologically significant figure. Looking at this chart, you can see that we had fallen quite precipitously to get there, so it does make quite a bit of sense that we had to have a bit of a bounce.

GBP/USD Video 22.03.22

The US dollar has been rather strong for quite some time, and therefore it is not a huge surprise to see that we are all the way down in this region. If we were to break down below the 1.30 handle, then the British pound will more than likely go looking towards the 1.28 handle. Below that level, the market would start falling apart and drop rather drastically. In that scenario, we would have a rather large amount of negativity out there due to the fact that people would be running to the US dollar for safety.

Alternately, if we turn around and break above the 1.32 handle, it opens up a move to as high as 1.34 above. That being said, the market is going to continue to see a lot of downward pressure until the overall global risk appetite, so that could be a major factor in this pair continuing to fall. Ultimately, this is a market that I think you are looking for short-term rallies to fade that show signs of exhaustion.

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