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 head’s 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 if 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 towards 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

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There are signs that the United States has already entered a recession, which is like kryptonite for the oil markets.

The WTI Crude Oil market had a relatively positive Independence Day, but it should be noted that volume was a bit thin as most trading was electronic and off hours. That being said, the market has reached the 50-day EMA, and it looks as if it is going to try to make a move higher. If we can break above the high from last week, it’s very possible this market could go to the $120 level.

On the other side of the equation, there is a massive uptrend line sitting just below that is expected. If we were to break down below that level, the market would almost certainly go down to the $100 level, which then would threaten the 200-day EMA. Breaking down below there is a technical trend change, and the market would almost certainly continue to fall in that scenario.

As things stand right now, we have a bit of a fight on our hands. The commodity markets have been falling rather hard for multiple reasons, not the least of which is that global growth is expected to slow down quite significantly. In fact, there are signs that the United States has already entered a recession, which is like kryptonite for the oil markets. That will be especially true with this grade of oil, as it is the main one in the United States.

On the other side of the argument, there has been a serious lack of production for some time, and now the Strategic Petroleum Reserve in the United States is down to about 25 days worth of supply. In other words, the US government might be a buyer when nobody else is, keeping the price somewhat elevated. Either way, the longer-term outlook for crude oil based upon the future spread is still positive, so that might be something worth keeping an eye on.

However, price will lead the way, so if that $100 level holds, crude oil will fall, despite some of the other issues involved. On a break above the $115 level, I anticipate that the market will try to go to the $120 level, possibly even higher than that. On that move, we’re starting to talk about breaking out to fresh, new highs, which is still a possibility to a number of factors, not the least of which is that Russia still faces sanctions.