GBPUSD soars in a short-covering rally

The GBPUSD pair rocketed higher on Friday and was seen more than 3% higher during the London session, trading at around 1.1850. These massive movements are becoming a new normal as volatility continues to be extremely elevated, and the whole is buying the US dollars everywhere.

Earlier in the week, the cable dropped to 1.15, which were levels last seen in 1985, and it's very close to new all-time lows. The dollar index surged to new all-time highs as the USDJPY pair broke back above 110, and the EURUSD declined below 1.07. Commodity-linked currencies also cratered. 

 

In times like these, technical analysis is usually useless; that's the fact. If the pair drops below today's lows of 1.14, we could see a quick deterioration toward the 1.10 mark.

 

On the upside, the resistance seems to be in the 1.20 area, and if bulls push the pound above this level, the short-term outlook could change to bullish, targeting the 1.22 threshold.

 

As previously said, volatility is extreme everywhere, so be very cautious when trading nowadays.

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