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Christopher Lewis

The British pound has rallied significantly during the trading session on Wednesday, reaching towards the 1.36 level. The 1.36 level is the top of a major resistance barrier, and it looks as if we are ready to go higher, perhaps reaching towards 1.3750 level. Short-term pullbacks at this point in time should be a nice buying opportunity in a market that is clearly very bullish. Looking at the chart, the 50 day EMA has offered significant support underneath, as you can see from several days back. I think every time we pull back, there will be value hunters looking to pick up the British pound, as it is historically cheap at this level.

GBP/USD Video 31.12.20

The biggest driver I think at this point time is going to be stimulus in the United States, and therefore we could see a little bit of a move to the upside and try to reach towards 1.3750 level. Ultimately, think we could go much higher than that but at this point in time you need to be aware the fact that the British pound also has to deal with the British economy, which is of course suffering due to the lock down of its citizens and of course the fact that there are still a lot of concerns when it comes to the details of Brexit itself.

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All things being equal, I think we continue to grind higher, but eventually try to make a bigger move to the upside. The thin volume this time a year of course is going to continue to cause issues, but longer-term momentum should continue to reach towards the upside.

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

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