GBP/USD Price Forecast – British Pound Pulls Back

The British pound has initially tried to break out during the trading session on Wednesday but has found enough resistance above to turn things around and pulled back a bit. That being said, we are still very bullish looking at this point and it will more than likely only end up being a bit of a buying opportunity. This will be especially true if Jerome Powell is dovish during the press conference, pushing the British pound higher by default as the US dollar will get hit hard.

GBP/USD Video 28.01.21

Even if we do break down a bit from here, there should be plenty of support down near the 1.36 level and almost certainly the 1.35 handle. The 50 day EMA sits just below the 1.35 handle, so I believe that will be a potential “floor the market” for the British pound going forward. To the upside, the next major resistance barrier if we can leave the 1.3750 level behind will be the 1.40 level, which is not only a large, round, psychologically significant figure, but it is also a structurally important level looking back historically.

The British economy of course is suffering at the hands of the lockdown but at the same time you can make a huge argument for the British pound being historically cheap, and I suspect that a lot of people are doing just that when they buy it. This is probably less about the pound and more about the dollar at this point, which certainly has been under major pressure recently. All things being equal, this should remain a “buy on the dips” currency pair. I have no plans to sell this market anytime soon.

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