Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

GBP/USD: Identifying The Bottom Is Risky Business

By Carl ParaskevasForexJul 06, 2022 02:12PM ET
www.investing.com/analysis/gbpusd-identifying-the-bottom-is-risky-business-200626770
GBP/USD: Identifying The Bottom Is Risky Business
By Carl Paraskevas   |  Jul 06, 2022 02:12PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

GBP/USD is closer to 2016 flash crash levels than ever before. At the time of writing, the pair was down by -1.61% this week to trade at 1.1895. That’s not too far from its weekly low of 1.1876. Circumstances today, however, are very different than they were during the flash crash.

GBP/USD’s fall from its May 21, 2021 high of 1.4250 has been anything but accidental. The political chaos in Westminster this week is just the latest act in what has been a drawn-out tragedy for the UK economy in 2022. Fears of global recession haven’t helped the British pound either.

Economic contraction and record-high inflation are two factors the Bank of England will need to contend with at its next meeting on Aug 4. A weaker pound is unlikely to help either in the near term. But even if the Bank of England does raise interest rates at a faster pace of 50 bps, how does it compete with the Fed, which is hellbent on tightening interest aggressively even at the cost of higher unemployment? Traders should ask these questions as they size up GBP/USD.

GBP/USD weekly chart.
GBP/USD weekly chart.

Knowing the current context behind the GBP/USD’s latest fall, I do question whether it is sensible for big buyers to swoop in and buy up the British pound at levels south from here. The latest CFTC net speculative positions for GBP/USD show the market moving less bearish than before, but given that positioning didn’t look massively stretched prior, that may add the capacity for more shorts before the situation looks out of hand.

GBP/USD could very well rise in the coming days. Still, I am personally holding out from buying until there are decent signs of either a potential reversal or even a retracement before committing any capital. Even better if that price action is catalyzed by a big shift in the narrative around GBP/USD. Until then, I am trading this pair cautiously and without much conviction.

GBP/USD: Identifying The Bottom Is Risky Business
 

Related Articles

Kenny Fisher
Aussie Stabilizes After Slide By Kenny Fisher - Aug 16, 2022

The Australian dollar is steady today, after a massive 1.40% decline on Monday. In the North American session, AUD/USD is trading at 0.7015, down 0.10% on the day. Aussie...

Al Brooks
EUR/USD: Bulls Want Major Trend Reversal By Al Brooks - Aug 16, 2022

EUR/USD bulls reached 2017 low and failed to break out above the August 2 high. Bears have gotten two consecutive bear bars and are testing the July 27 lows. While the August 10...

Scott Barkley
GBP/CHF Channel Breakout Opportunity By Scott Barkley - Aug 16, 2022

Bullish GBP/CHF is currently at 1.1438 after a breakout of the channel. We are looking for a continuation to the ATR target at 1.1498 area with a bigger target the former bottom...

GBP/USD: Identifying The Bottom Is Risky Business

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email