British Pound Trying to Recover

The British pound has rallied a bit during the trading session on Wednesday to show signs of stability. However, this is more or less going to be a situation where we are oversold, so it does make sense that we would get a little bit of a bounce. The 1.33 level above is an area that previously was supportive, and of course, we have a significant amount of noise in that general vicinity that will probably cause a significant amount of resistance. In other words, I think that this rally will eventually be sold into.

GBP/USD Video 10.03.22

On the other hand, if we were to break down below the bottom of the lows from the trading session on Tuesday, then it is possible that the British pound drops rather significantly, reaching down towards the 1.30 handle. I do think it is only a matter of time before we get there anyway, so it all ends up being a negative market in general. I think the US dollar will continue to strengthen based upon a lot of fear around the world, and even though the British pound has done reasonably well against the greenback in comparison to some of its G 10 peers.

If we break down below the 1.30 level, the market will more than likely unravel quite drastically. As far as buying is concerned, I do not really have an interest in doing so at the moment, unless something changes from a fundamental standpoint. Negativity continues to be the main theme here, so simply waiting for signs of exhaustion above will probably be how I short this market next.

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