The British pound has gone back and forth during trading on Thursday as we continue to sit just above the 1.36 handle. This is an area that previously has been resistance, so at this point I think it would not be a huge surprise to see this market simply go back and forth as we drift into the weekend. Keep in mind that a lot of what we are witnessing right now is the US dollar recovery, mainly due to an oversold condition, but perhaps even more importantly in the short term, interest rates in the United States have been rising in the bond markets.
GBP/USD Video 15.01.21
Nonetheless, this is still a very bullish trend in general, and with the massive amounts of stimulus that will be coming out the United States, it is very likely that we will continue to see a lot of noise overall. That being said, I believe that the 1.35 level is also important support, just as the 50 day EMA underneath, painted in red on the chart, will end up being the same. All things being equal, I believe this is a market that we should be buying on dips, as there has been a significant demand for anything beyond the US dollar, and of course from a historical standpoint, the British pound is rather cheap at this point. To the upside, I believe that the 1.3750 level will be a target, and then after that we will go looking towards 1.40 level longer-term. Ultimately, I do not have any interest in shorting, at least not yet.
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