British Pound Trying to Stabilize

The British pound has done very little during the trading session on Tuesday, as we are sitting at the 1.31 level. Because of this, the market looks as if it is trying to pick up its feet and stabilize a bit. After all, the British pound is oversold but I look at this as a potential opportunity. Markets do not go in one direction forever, so you should keep an eye on signs of exhaustion after some type of rally. Ultimately, this is a market that I think will struggle to get above the 1.33 handle, at least not without some type of fundamental shift.

GBP/USD Video 09.03.22

If we did break down below the trading session for Tuesday, then it is almost certain that we are going to go looking towards the 1.30 handle underneath. This would attract a lot of attention, as it is a large, round, psychologically significant figure, and an area that has been important multiple times in the past.

The market is one that I would look to fade the first signs of exhaustion because quite frankly it is likely that we will continue to see a lot of selling pressure due to all of the uncertainty around the world and of course the fact that the Federal Reserve is likely to tighten monetary policy much more aggressive than most other central banks, including the Bank of England. That being said, the British pound took quite some time to break down, because the Bank of England is worried about inflation, but people are now starting to worry about safety more than anything else.

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