British Pound Testing Major Level

The British pound has fallen during the early hours of the Monday session to reach down towards the 1.35 handle. This is an area that of course is psychologically important and interesting, so it is not a huge surprise to see that we are hanging about this level. If we were to break down below the lows of the Monday session, then it is very likely that we will continue to see a lot of back and forth and chop in order to build up inertia for the next move.

GBP/USD Video 08.02.22

I do think that it is possible we could be building up some type of consolidation zone, but if we were to turn around and break above the highs of the Friday session, that would be extraordinarily bullish and then I think it would only be a matter of time before we would break through the previous trendline and continue going much higher. Obviously, a lot of this comes down to the US dollar and risk appetite, and perhaps whether or not the Bank of England continues to sound hawkish.

Keep in mind that the Federal Reserve also does as well, but if risk appetite starts to wane, it is very likely that we will see this market favor the greenback as it is considered to be a safety currency. In general, I think you are looking at a very messy trading, so therefore you have to keep your position size reasonable, and that of course is reasonable advice for almost every currency pair right now.

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