British Pound Shows Tentative Stability

The British pound rallied a bit during the trading session on Friday as the market is trying to stabilize around the 1.34 handle. Having said that, the market as you can see has rallied a bit beyond that, but also has found selling pressure to continue to keep a little bit of a lid on Sterling. Ultimately, this is a market that is going to be greatly influenced by the risk appetite around the world, as the US dollar is a major safety currency. However, we also have to keep in mind that the market is likely to see these currencies as relative equals all things being equal, as both central banks are looking at several interest rate hikes.

GBP/USD Video 28.02.22

Nonetheless, as we reached towards the 1.35 level above, I anticipate that there should be a significant amount of resistance as it was previous support. The massive candlestick on Thursday shows just how quickly people will be willing to dump Sterling if there is some type of major “risk off event”, like we had seen with Russian soldiers crossing into Ukraine. With a whole plethora of issues around the world right now when it comes to slowing down and inflation, we may eventually see the markets running towards the US dollar due to the fact that we may just simply have a problem with growth.

Breaking down below the bottom of the Thursday candlestick will more than likely have this market dropping rather rapidly, perhaps reaching down towards 1.30 level. If we were to somehow take out the highs from Monday, then we might have the possibility of going to the 1.37 handle, although I do not think it is going to happen soon.

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