The holiday is a sign for the future

GBP/USD fell to long-term lows yesterday, but trading came as a bank holiday was observed in Britain.

GBP/USD price is trading near the 1.17180 mark at the time of writing. For traders who looked away yesterday and paid no heed, GBP/USD fell to lows near 1.16480, so today’s higher trade value may be considered a potential upside. But before traders are tempted to believe that the worst is over for the British pound, they might consider the following.

The idea that Britain was celebrating its ‘end of summer’ holiday yesterday and that the banks were officially closed meant that British institutions were not actively translating. The idea that an ‘unprotected’ pound was left to harbor sentiment forex trading international markets and sold quite happily is worrying. This could be a sign that global behavioral sentiment sees the GBP/USD quote still overrated.

GBP/USD Bullish Traders Think The Forex Pair Is Oversold, But Beware

The last time GBP/USD traded at yesterday’s lows was at the height of the coronavirus scare, when the currency pair momentarily came into sight of the 1.14225 index in March 2020. Yes, this time is different from the Coronavirus experience, but one would have to ask if it is a better economic circumstance. The economic outlook and central bank interest rate policies continue to be a concern for Britain and its global counterparts. The fact that the US Federal Reserve seems determined to maintain a policy of aggressive (hawkish) interest rates is also wreaking havoc on GBP/USD:

  • Keep a close eye on the 1.17000 level, if it falters again in the short term it could be a bearish signal.
  • Later this week, US jobs data will certainly create more volatility for GBP/USD, and financial institutions may now be positioning themselves for the statistics due out on Friday.

Current support levels should be watched for additional GBP/USD signals

If the 1.17000 level becomes vulnerable again and trading remains below this index, it would be a worrying sign for GBP/USD. Yesterday’s move to extreme lows may not be repeated anytime soon, but it’s a reminder that sentiment remains fragile. If he assist level price is starting to waver, traders can’t be blamed for betting marks below 1.17000 targeting 1.16900 for quick results if they are willing to bet on a downward price move. Conditions will remain volatile in the GBP/USD pair and its bearish trajectory shows little sign of waning anytime soon.

GBP/USD short-term forecast:

  • Current resistance: 1.17239
  • Current support: 1.17010
  • High target: 1.17580
  • Low target: 1.16510

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