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Christopher Lewis
GBP/USD

The British pound fell during the trading session on Monday to kick off the week on its back foot. However, the 1.35 level underneath did offer a little bit of support, just as the 50 day EMA should come based upon the previous action. With that in mind, I believe that traders will be looking for some type of supportive action that they can start buying. There is a little bit of a “micro double top” that we just formed at the 1.37 level, but I do not think that it is some type of major barrier that cannot become broken.

GBP/USD Video 19.01.21

Quite frankly, the US dollar had been oversold for some time so it should not be much of a surprise to see it recover over the last couple of days. It could probably even go little bit further, but at this point in time I have no interest in trying to short this pair, despite the fact that I recognize that the United Kingdom has a whole set of issues of its own to deal with. At the end of the day, it looks like traders are starting to pay closer attention to stimulus than anything else, and when it comes to stimulus the Americans tend to get what they want in the form of currency devaluation.

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Beyond that, the British pound is historically cheap at this level, so it is probably only a matter of time before longer-term traders step in and try to pick this pair up as well. I do not quite see it yet, but once I get that support of candle, I will be a buyer. As a caveat, if we were to turn around a break above the 1.36 level that would also warrant me going long.

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

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