The British Pound has been extremely weak of late, even as expectations remain for the BoE to hike rates in 2022.
The bank was even expected to hike in November. At the time, the pair was holding just inside of the 1.3900 handle, threatening to break above a bull flag formation that had built in.
When the BoE didn't hike, the pair started a swan dive that didn't find any meaningful support until this week. That support is at the 38.2% retracement of the 2020-2021 major move, which is now confluent with the bottom side of that bull flag formation. This is also the 2021 low, so quite a bit going on.
There was breakdown potential this morning ahead of CPI, but when that printed in-line at 6.8%, a bounce began to develop. The pair is far from out of the woods at this point as next week's economic calendar brings U.K. employment numbers, U.K. CPI and a Bank of England rate decision on Thursday. And of course, the FOMC rate decision is on Wednesday.
Near-term resistance potential around 3285 and 3350. If support gives way, the next major level is the 1.3000 handle, followed by a Fibonacci level around 1.2850.