GBP/USD Price Forecast – British Pound Trying to Recover

The British pound went back and forth during the course of the trading session on Tuesday to test the 1.36 handle. By doing so, it suggests that we have a lot of volatility ahead of us on short-term charts, but we are still very much in an uptrend. Yes, I realize that the markets have been a bit noisy over the last couple of days, but quite frankly I think a lot of this is going to be due to positioning at the beginning of the year and of course the stricter lockdown that the United Kingdom has imposed.

GBP/USD Video 06.01.2021

Speaking of the lock down, one would have to assume that the British pound is holding up quite nicely considering what that could have done. With this being the case, I think the 1.35 level underneath should be supported, and most certainly the 50 day EMA should be which is closer to the 1.3350 level. We have been in an up trending channel, and therefore one assumes that we continue that. To the upside, if we were to clear the 1.37 level it is very likely that the British pound would go looking towards the 1.40 level over the longer term.

With the Senate runoff elections during the day on Tuesday, as soon as that result is known, that could have a great influence on the US dollar. If the Democrats sweep the Senate, then it is very likely that the US dollar will get hit rather hard. That could be one catalyst to go much higher.

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