British Pound Gapped Lower but Recovers

The British pound gapped lower to kick off the trading week on Monday, reaching towards the 1.33 handle. We have since recovered, trying to capture the 1.34 handle. By doing so, the market looks as if it is going to try to go looking towards 1.35 handle if we can get any type of strength whatsoever, but it is worth noting that there is a huge run to the US dollar and other safety in general right now. Because of this, the market is more likely than not going to continue finding sellers above, and it is probably worth noting that there is a significant downtrend line that causes major issues even if we do recover.

GBP/USD Video 01.03.22

To the downside, the 1.32 handle could be the target if we break down, which is obviously an area that we had bounced from previously. The British pound will probably be a bit more resilient against the US dollar than some of its G 10 counterparts, simply due to the fact that the Bank of England is every bit as hawkish as the Federal Reserve.

If we get a move towards the greenback, it will probably have more to do with the idea of safety than anything else. Pay attention to the rest of the world, as far as US dollar related pairs are concerned as it could give you a bit of a “heads up” as to where this market goes. More likely than not, what moves this pair will be something external and not necessarily anything to do with the British pound.

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