GBP/USD Weekly Price Forecast – British Pound Rallying on Brexit Hopes

British pound traders have had a wild week, as we fell down to the 200 week EMA, near the 1.3150 level. Since then, we are broken back above the 1.35 handle, in what has been a very wild ride. It appears that we are getting close to the end of the negotiation between the United Kingdom and the European Union, but as I record this we are still arguing about fish. Ultimately, this is a situation where we continue to go higher, perhaps reaching towards the 1.3750 level.

GBP/USD Video 28.12.20

The biggest problem that I have with the pair at the moment is that the United Kingdom is locking down its economy, and we have to eventually start focusing on the economy itself, as it certainly will not be pretty. That being said, we are historically cheap so we have a lot of traders that will be looking at this as a potential longer-term value play. However, that does not mean that is going to be easy to hang on to this trade. If we can get some type of positive momentum with the British economy, that could be enough to really get this thing moving.

On the other side, we have stimulus that of course will work against the value of the US dollar. I anticipate that we could see a “negative US dollar market”, with perhaps the British pound underperforming some other currencies. In other words, it could go higher in 2021, but you may see other currency such as the Australian dollar outperform. At this point though, it looks like the black 200 week EMA is your support.

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