British Pound Trying to Recover Against US Dollar

The British pound has rallied significantly during the course of the trading session on Monday as the oversold condition is getting a bit extreme. Nonetheless, this is a market that is in a downtrend for a reason, but we also have the Bank of England meeting this week and that of course is going to cause a little bit of noise in the British pound overall. Because of this, I would anticipate a lot of volatility in general, but I do think that given enough time the British pound will return to its downtrend as there are a lot of concerns out there. This is simply a bit of an oversold bounce and of course a bit of short covering ahead of the central bank meeting.

GBP/USD Video 01.02.22

While the Bank of England is anticipated to raise interest rates and tighten a bit, the reality is that the US dollar will continue to attract a certain amount of attention due to the fact there are a lot of concerns out there. As long as that is going to be the case, I just do not see how the British pound takes off longer term. The US dollar will continue to be attractive, but obviously markets cannot go straight up in the air forever. As long as that is going to be the case, we will get the occasional opportunity to pick up a little bit of value in this market every time we get a little bit of a bounce like this.

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