GBP/USD Price Forecast – British Pound Continues to Go Parabolic

The British pound has rallied a bit during the trading session yet again on Friday as we continue to see massive amounts of money go flying into Sterling, on the hopes of the British economy reopening quicker than many of its peers. This is perhaps due to the 14 million vaccinations that have been given out already in the UK, and the fact that so many of the other G-10 economies have not been able to keep up.

Furthermore, we have seen the Brexit come and go, so that takes a significant amount of weight off of the British pound in and of itself. Finally, we have the stimulus coming out the United States, and that does drive down the value of the US dollar over the longer-term.

Yields in America are rising, and that certainly has helped the greenback against many of the other currencies around the world, but the British pound is a bit of an outlier due to the fact that it is so historically cheap. After all, we just spent three years shorting the pound and there are massive positions that still need to be unwound.

All things being equal, this is probably going to be one of the better performing currencies this year, just because it is coming from such a low starting point. Historically speaking, we are probably going to be looking at the 1.50 level all things considered, but that does not mean we need to get there tomorrow. A pullback occasionally should offer a buying opportunity and I believe that the 1.3750 level now is the “floor the market.” I have absolutely no interest in shorting this pair anytime soon.