British Pound Gets Clobbered

The British pound has fallen rather hard against the greenback during trading on Friday, as traders ran towards safety. Quite frankly, there are far too many issues out there to want to bet on other economies. The US jobs number came in at well over 600,000 jobs added, so that has increased pressure on the Federal Reserve to tighten monetary policy. If they do in fact end up doing that, that will only strengthen the US dollar further.

GBP/USD Video 07.03.22

While the next rate hike is pretty much priced into the market, with this type of growth in the United States right along with inflation, interest rates simply have to go higher. That being said, there is also a flight to safety due to the fact that there is the war in Ukraine, global slowing down, and of course interest rate concerns. In other words, people are either putting money into the US Treasury market, or US firms are pulling money out of other economies, take your pick.

At this point, the British pound is threatening the 1.32 level, and breaking down below this area could set off a chain reaction of significant selling. With that in mind, we need to keep an eye on any type of bounce as a potential selling opportunity as we have clearly made our decision as to which direction, we want to go in the longer term. There are a few things that could cause significant rallies, but right now they do not seem to be at the forefront of people’s thoughts. If the war in Ukraine stops, that could be a positive turn of events for markets, but right now that does not look like it is happening.

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