GBP/USD Price Forecast – Pound Continues to Walk Channel Higher

The British pound has gone back and forth during the trading session on Monday as we continue to walk higher along in this well-defined channel. The 50 day EMA is also walking along the uptrend line, so I think there are going to be plenty of buyers looking to pick up little dips as the British pound has been in such a strong uptrend for quite a while. Ultimately, when you look at the longer-term chart you can see that the 1.42 level has been massive resistance in the past, so the fact that we pulled back from there is not a huge surprise.

GBP/USD Video 16.03.21

If you look at the overall attitude of markets, this comes down to a couple of things when you are talking about trading this currency pair. You have the British pound which of course is historically cheap, and people are trying to price in the idea of the United Kingdom recovering from the pandemic and reopening the economy. At this point in time, they are also starting to focus on the US dollar, and perhaps even more importantly yields in the bond market. That being said, if we can get yields to calm down in the treasury markets, that will put downward pressure on the US dollar as well.

At this point in time, I do not have any interest in shorting this market, but I also recognize that if we were to break down below the 1.3750 level, we could very well drift towards the 1.35 handle. With that being the case, this is a market that continues to look like it is going to be a “buy on the dips” type of situation.

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