The GBP/USD has seen a swift selloff take place and the Forex pair is now traversing values not seen since the second week of January 2021.
Traders of the GBP/USD have either been treated or traumatized by the Forex pair in the past day. Swift trading forces have taken hold and the GBP/USD ripped lower from a value of nearly 1.35550 to 1.35040 in the blink of an eye. This sudden drop was quickly followed by a reversal higher which hit a ratio of approximately 1.35500 before the GBP/USD found headwinds again.
As of this writing, the GBP/USD is near the 1.35200 vicinity and conditions remain fast and choppy. Traders who have the courage to partake in speculative positions should practice their risk-taking skills to guard against another influx of volatility. While the GBP/USD may have taken on the appearance of being oversold, technically if the 1.350000 juncture shows vulnerability, it could set off a wave of targeted selling which aims for values seen in December of 2020. The 1.34500 mark saw plenty of trading within its ratio late last year.
Global markets are being roiled as institutional investors adjust their outlooks regarding central banks; both the US Federal Reserve and Bank of England have stated their cases about pursuing higher interest rates. In the short term it appear the sentiment being generated from the US central bank and economic concerns regarding higher energy costs in the UK may be having an effect.
The US bond market is also playing a part in the Forex equation. While some traders who are fond of the British pound may believe the GBP/USD has been oversold, they may want to remain conservative and see prices consolidate before launching long positions near term.
Technically, it appears the GBP/USD could see additional downside pressure. Traders with a cautious approach may want to wait for slight reversals higher before they proceed with their selling positions and seek downside action. Aggressive traders may dare to enter selling positions at the current price levels near 1.35200.
Support near the 1.35100 mark should be monitored, if this level falters and the 1.35050 and 1.35000 come into focus it could set off another round of swift volatility. Traders should have their take profit and stop loss orders working to guard against fast conditions. Speculators aiming for lower values should not let greed get in their way, and make sure they target legitimate ratios which do not extend their positions longer than they anticipate.
GBP/USD Short-Term Outlook
Current Resistance: 1.35350
Current Support: 1.35040
High Target: 1.35620
Low Target: 1.34855