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

The British pound rallied to kick off the trading session on Tuesday as we continue to see a general grind to the upside. That being said, I do think that it is only a matter of time before traders try to break out to the upside, perhaps based upon the stimulus situation in the United States. In the short term though, I suspect that we may have a little bit more back-and-forth trading ahead of us than anything else. This would typically be the case when you are getting a bit stretched, and I do think that the US dollar is oversold, at least in the short term.

GBP/USD Video 20.01.21

As the markets are waiting to see what Janet Yellen says about any potential monetary policy in her US Senate confirmation hearings, keep in mind that the occasional headline could throw this market around. That being said, she is extraordinarily dovish most of the time, so it is difficult to imagine that she would suddenly change her tune. In other words, we will more than likely see more pressure on the US dollar, but we may need to kill some time in this area after these massive gains.

Furthermore, we also have to keep in mind that the United Kingdom is locking itself down, and therefore the economic picture in the UK is certainly suffering. If we continue to see lockdowns though, there may be a short-term catalyst for this market the pullback even further. Currently, I have the 50 day EMA, near the 1.3350 level as support for the longer-term trend.

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