The British pound has rallied a bit during the trading session on Wednesday as we are waiting for the statement from the Federal Reserve. While a 25 basis points rate hike is pretty much expected, the question now is whether or not the Federal Reserve will continue to sound hawkish? If they do, that could be very strong for the US dollar, but if they sound like they are starting to think about the war in Ukraine or the general slowdown of the global economy as a reason to step back a bit, then it is possible that the US dollar may continue to weaken a bit.
GBP/USD Video 17.03.22
The British pound has been oversold for a while, so this bounce certainly seems as if it was necessary. The fact that we bounced from the 1.30 level also makes a lot of sense, as the markets like these big, round, psychologically important numbers. Because of this, is very likely that we will continue to see a bit of a fight in this area, but ultimately the market will have to decide whether or not we can truly recover from here, or if we are going to sell off on signs of exhaustion.
If the market was to break down below the 1.30 level, then the market more than likely will go looking towards the 1.28 level. This is an area that also was important, so I think rallies at this point in time will probably give us an opportunity to short a market that has been in a downtrend for a while.
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This article was originally posted on FX Empire