The GBP/USD has sustained a heavy dose of nervous trading the past handful of days as financial institutions try to find equilibrium.
As of this writing, the GBP/USD is traversing near the 1.33200 level with fast conditions threatening to be exhibited at any moment. On the 25th of November, the Forex pair was near the 1.33550 juncture, and when news regarding the outbreak of Omicron began to hit the markets the GBP/USD did test support near the 1.32778 level. However, in nervous trading yesterday, a spike lower did see the USD/GBP spike to a low of approximately 1.31955 before recovering with a swift reversal higher.
Speculators need to use their full arsenal of risk management tools near term. While technical charts certainly offer clues regarding the potential direction of the GBP/USD, there is also a massive amount of fundamental news and economic concerns driving Forex. Major currency pairs such as the GBP/USD are also stuck in the fog regarding central bank policies, which are trying to be interpreted as official policies grapple with a financial reality which is also generating a perplexing outlook.
On the 3rd of November the GBP/USD was within sight of the 1.37000 ratio and has seen a rather steady bearish trend ensue since then. The notion the GBP/USD is now flirting with the 1.33000 mark may leave a certain amount of speculators feeling as if the pair has been oversold, but traders need to remember the actual market doesn’t care about speculators' feelings. The trend lower has been rather strong and the GBP/USD is once again testing support levels not sincerely tested since the middle of December 2020.
Some traders may use the start of December and the current values as a way to simply say the exchange rate of the GBP/USD has once again proven it is all a cyclical game. Certainly the GBP/USD has tests of reversals which create strong trends, but the current trading conditions of the Forex pair do point to a rather troublesome amount of nervous sentiment which is causing the British pound to suffer a decline. The question is when a reversal can be demonstrated.
Traders who believe the GBP/USD is within oversold territory are cautioned to use stop losses that guard against further bearish momentum. If support around the 1.33100 level falters it could certainly indicate another leg down is going to take place which could retest the 1.32950 to 1.32900 values.
Speculators who want to be sellers and pursue further bearish price action should also remain rather conservative. Quick hitting trades which seek targeted ratios may prove a solid plan of attack as the GBP/USD continues to produce nervous results. Speculative wagers that sell the GBP/USD and look for nearby support could prove opportunistic in the short term.
GBP/USD Short-Term Outlook
Current Resistance: 1.33440
Current Support: 1.33100
High Target: 1.33670
Low Target: 1.32700