GBP/USD Price Forecast – British Pound Continues to Grind Higher

The British pound has rallied a bit during the trading session on Thursday, breaking above the 1.35 handle as it looks like the Brexit deal will be getting done rather soon. However, the biggest problem that we have now is fish yet again, as that has been brought up at the last moment. All things being equal, I do think that the British pound will continue to go higher over the longer term but do not be surprised at all if we get some type of pullback in the meantime.

GBP/USD Video 28.12.20

The question is not so much as to whether or not the British pound is “cheap”, but it is whether we can continue the uptrend? After all, the United Kingdom has a lot of economic issues, and even if we do get past the Brexit problem, then you need to start looking at the economy of the United Kingdom on its own. With the massive lockdowns, it is difficult to imagine that the British economy is going to do well, so we may be reaching the top of this most recent impulsive leg higher. I would anticipate a lot of noise between now and the beginning of the year, so therefore it is going to be very difficult to trade.

Not only would you have a lack of liquidity and volume, but you also have a lack of clarity at the same time, which of course is a very dangerous mix. I believe that the 50 day EMA underneath at the 1.3250 level is also worth paying attention to. With this, I believe that this pair is probably best left alone in the short term.

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