GBP/USD Price Forecast: Heads Towards Resistance Ahead of Brexit Talks

The British pound has rallied early during the trading session on Wednesday as traders are trying to get ahead of the meeting that Boris Johnson and Ursula van der Leyen are having during dinner time. Ultimately, this could determine whether or not there is some type of Brexit deal, at least in the short term. Nonetheless, traders will continue to look for reasons to buy the British pound due to the fact that it is so heavily undervalued in general. Historically speaking, we should be about 15% higher than we are right now which would be a huge move in the currency markets.

GBP/USD Video 10.12.20

With that being said, it is very likely that we are going to continue to see a lot of volatility going forward and there will be reasons regardless of what happens for people to be a buyer. The fact that they will probably state that they are getting closer and are willing to sign an agreement even after New Year’s Day, will probably placate the market and continue more of the nonsense that we have been saying for some time. The 1.35 level course is crucial, so therefore if we can get a daily close above there it is likely that we continue to go much higher, perhaps to the 1.3750 level again.

Pullbacks at this point time should end up being buying opportunities and therefore I do not have any interest in shorting this market, and quite frankly look at it as an opportunity to pick up “cheap Pounds.” The 50 day EMA underneath should offer support near the 1.32 handle unless of course the result of the dinner meeting is that there is absolutely no chance of an agreement. The odds of that are very slim to say the least.

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