GBP/USD Price Forecast – British Pound Continues to Grind

The British pound has rallied a bit during the trading session here on Tuesday, to reach towards the 1.35 handle. By doing so it shows that the market is likely to continue going higher. The 1.36 level above is an area that has already been tested, and I think it is an area that we could return to. All things being said though, we should keep in mind that the Brexit situation continues to be a bit of an issue, as we are still determining what some of the minor details are. Nonetheless, we have stimulus coming out of the United States and therefore it does work against the value of the US dollar. As a result, it is likely that the British pound will continue to gain against the greenback for that reason alone.

GBP/USD Video 30.12.20

Do not get me wrong, the British economy is certainly hurting, and I do think that the easy money has already been made when it comes to buying Sterling, but that does not mean that we cannot go higher. The 50 day EMA is sitting at roughly 1.33, and I think that is going to be your short-term floor. Nonetheless, the market is likely to continue grinding higher due to the fact that the British pound is historically cheap right now, but it will have the headwinds of the coronavirus lockdowns and a lot of headaches when it comes to trade with its number one trading partner, the European Union.

Yes, some of the biggest issues have been sorted out but there are still a lot of minute details that will continue to pop up from time to time as the divorce gets finalized.

For a look at all of today’s economic events, check out our economic calendar.