GBP/USD Price Forecast – Pound Continues to Chip Away at Resistance

The British pound initially tried to rally during the trading session on Monday but gave back quite a bit of the gains to show signs of weakness again. Ultimately, the British pound has gotten a little bit overextended, so I do believe that it is only a matter of time before we have to pull back in order to find an of value to continue going. That being said, the US dollar is still on its back foot, so it does make sense that we would see a continued rally over the longer term.

GBP/USD Video 05.01.2021

I believe that the 1.35 level would be an area where a lot of people pay attention to, so it is worth keeping an eye on it. Any pullback towards that area probably has a lot of people looking to get involved given enough time, and beyond that we also have the 50 day EMA trying to reach towards that area. On the other hand, if we turn around a break above the top of the candlestick that would show even more momentum going into the British pound, but I think at this point it is probably a bit much to ask out of the currency, simply due to the fact that there seems to be more lockdowns coming towards the United Kingdom, and therefore it will slow down the economy.

The US dollar weakening is probably the biggest driver of this pair going higher, at least at the moment. Ultimately, we have gotten through Brexit, and now we have to take a look at the UK economy itself. Now that we are through the agreement, there is not as much to drive optimism.

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