British Pound Falls Drastically During the Week

The British pound has initially gapped during the course of the week to show signs of risk aversion but then turned around to fill that gap. As is so often the case, the gap got filled, and then we started selling off again. With interesting is that anything that is not related to the US dollar seems to be selling off, with perhaps the exception of commodities. As a result, the British pound was not immune to this selling, and we now find ourselves at a very dangerous crossroads.

GBP/USD Video 07.03.22

The 1.32 level is being tested as I record this, and it is an area that I think needs to hold. If it does not, then the bottom will put more likely than not to fall out, sending the British pound down towards the 1.30 level. The 1.30 level of course is an area that is a large, round, psychologically significant figure, and will attract a lot of attention. That is an area where I would expect buyers the jump back in, but I think a lot would depend on what is going on around the world.

The Bank of England is probably the only major central bank right now that claims to be hawkish besides the Federal Reserve, so it is a bit surprising to see just how quickly people dumped sterling. That being said, price is what determines our actions over the longer term, so I do think that rallies will more likely than not get sold into going forward. If that continues to be the case, then you may wish to go on lower time frames in order to gain entry. I have no interest in buying this pair now.

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