The British pound plunged to $1.033 on Monday morning after reaching a peak of $2.50 to £1 in… 1971. It has since recovered to $1.08.
The UK government’s colossal gamble has shocked the financial markets by deciding to execute the largest tax cuts in 50 years while simultaneously borrowing tens of billions of pounds to subsidize skyrocketing energy costs this winter.
The central bank declared that it was “closely monitoring” the markets and would not hold back from raising interest rates in order to fight inflation. It made its remark after the pound hit an all-time low.
The Pound did manage to repel off parity. But is the ongoing correction more of a recovery, or just a pullback before the pair heads for parity?
It looks like the GBP/USD pair is on its way to forming a bearish rising wedge pattern on the H1 chart, which, once formed, is often viewed as a sell signal by the traders.
There are no significant support or resistance levels, and prices will continue to be volatile in coming trading sessions.