The GBP/USD fell to long-term lows yesterday, but the trading occurred as a bank holiday was being celebrated in Britain.

The GBP/USD is trading near the 1.17180 mark as of this writing.  For traders who turned their heads away yesterday and didn’t pay attention, the GBP/USD currency pair fell to a low of nearly 1.16480, thus today’s higher trading value may be considered a potential bright spot. But before traders are tempted to believe the worst is over for the British Pound, they might want to consider the following.

The notion that Great Britain was celebrating its ‘end of summer’ holiday yesterday and banks were officially closed meant that British institutions weren’t actively trading.  The notion that an ‘unprotected’ British Pound was left to the sentiment of international trading houses and sold off with a rather large amount of gusto is troubling. It could be a sign that behavioral sentiment globally views the GBP/USD as still being too highly valued.
 

GBP/USD Bullish Traders may believe the Forex pair is oversold but should be careful

The last time the GBP/USD traded at yesterday’s lows was during the height of coronavirus fear when the Forex pair went to within sight of the 1.14225 ratio momentarily in March of 2020. Yes, this time is different than the coronavirus experience, but the question, of it, is a better economic circumstance, should be asked. Economic outlooks and central bank interest rate policies remain troubling for Great Britain and its global counterparts. The fact the U.S Fed seems intent on maintaining a hawkish interest rate policy is playing havoc with the GBP/USD too.

• The 1.17000 level should be watched closely, if it falters again short term, this could be a bearish signal.
• Later this week jobs data from the U.S is certain to create more volatility for the GBP/USD, and financial institutions may be positioning now for the statistics that will come on Friday.
   

Current Support Levels should be monitored for Additional Signals from the GBP/USD

If the 1.17000 were to prove vulnerable again and trading is sustained below this ratio, it would be a troubling signal for the GBP/USD. Yesterday’s move toward extreme lows may not be repeated short term, but it is a reminder that sentiment remains fragile. If current support begins to falter, traders could not be blamed for wagering on marks below the 1.17000 that target 1.16900 for quick-hitting results if they are willing to bet on downside price action. Conditions will likely remain choppy in the GBP/USD and its bearish trajectory shows few signs of relenting in the near term.
 

GBP/USD Short-Term Outlook:

Current Resistance: 1.17239

Current Support: 1.17010

High Target: 1.17580

Low Target: 1.16510

(Click on image to enlarge)

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