GBP/USD Price Forecast – British Pound Gives Back Early Gains

The British pound initially tried to rally during the trading session on Monday but continues to find the 1.3750 level as a bit too difficult to break above. This is worth noting, because it is such an obvious level now that if we do break above it, I suspect people will start piling into the market again. This is an area that has been rather difficult over the last couple of weeks and from a historical standpoint has been an area of significant resistance in the past. Because of this, I think that the market continues to pull back in a bid to build up enough momentum to finally break out.

GBP/USD Video 09.02.21

At this point, I suspect that this probably has more to do with the US dollar than the British pound, although I am the first to admit that the British pound is still historically cheap at these levels. Because of this, I think that traders will continue to pick up the pound every time it dips. I suspect that there is significant support below the 1.35 handle, where we have seen the market turn around more than once. Furthermore, we have the 50 day EMA sitting just above that level so it is certainly another reason to think there might be buyers in that general vicinity. Ultimately, I do not have any interest in selling this pair quite yet, but also recognize that the US dollar does seem to be very noisy at this point, not just in this market but in several others. It is certainly worth keeping an eye on the US Dollar Index to get a feel for what is going to happen next.

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