The British pound has rallied a bit during the trading session on Wednesday to reach towards the 1.37 level. That of course is a large, round, psychologically significant figure, and it will attract a certain amount of attention. Nonetheless, we are in an uptrend and I do not think that is going to change anytime soon so I look at this as a “buy on the pullbacks” type of market. We have gotten through the Brexit mess, and now we are starting to focus on the United Kingdom from an economic standpoint. The believe at this point is that once we get through the vaccines and the lockdowns, the United Kingdom has quite a bit of potential upside, especially when you look at the historical price of the British pound and realize just how undervalued it is, all things being equal.
GBP/USD Video 14.01.21
In other words, the British pound still remains as a bit of a “value play”, and therefore I think a lot of longer-term players are continuing to add to their position. Furthermore, there is a lot of unwinding of shorts that still has to happen, and therefore I think we could continue to see more of a relentless march higher. I do not believe that it is going to be some type of skyrocketing position, just one that is most certainly going to stay in an uptrend. After all, the US dollar itself is being sold off, and that is a major driver higher as well. I have no interest in shorting, and I believe that the 1.35 level should offer massive support.
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