GBP/USD sights set on 1.3825 as markets roil

• Sterling continues to tumble, risk aversion still the play of the day heading into European markets.
• BoE interest rate and policy summary on Thursday could further jeopardize Sterling if language is too dovish.

GBP/USD has dropped heavily through two consecutive London-NY sessions, and is geared up to follow suit for lucky number three, with risk assets and equity markets around the globe plummeting today as market risk appetite sours in the face of inflation sparking a round of rising interest rates. Sterling is currently trading sideways in Asia, but with volatility spiking, currently around 1.3960 after seeing Tokyo session lows of 1.3940.

The Bank of England is poised to give their Monetary Policy Summary and Interest Rate Decision on Thursday at 12:00 GMT, but there is little between here and there to protect the Sterling from risk aversion taking chunks out of what has otherwise been a stellar run, with the GBP closing higher against the USD for seven consecutive weeks. Friday and Monday put a decisive end to that behaviour, carving out almost a third of the Sterling's gains up to today.

GBP/USD Technicals

Sterling has dumped ~140 pips a day for two consecutive trading days; barring a change in broad market sentiment, this behaviour is set to continue, and could see the pair well into 1.3825 territory unless risk suddenly becomes popular again today. Price is trading well into January's gains, and the H4 charts are posting successive lower highs/lower lows to accompany the recent risk aversion.

Today's pivot points:
R2: 1.4216
R1: 1.4086
PP: 1.4020
S1: 1.3890
S2: 1.3825