GBP/USD Price Forecast – British Pound Pulls Back From Major Area of Interest

The British pound has pulled back a bit on Monday after initially trying to be bullish for the day. That being said, the 1.35 level of course will attract a lot of attention, as it is a large, round, psychologically significant figure, and of course is also an area where we previously had seen both support and resistance. With that being the case, it makes quite a bit of sense that this parabolic move needs to pull back at the very least.

GBP/USD Video 04.01.22

The 50 day EMA sits near the 1.34 handle, so that might be where we are heading initially. That being said though, when you look at the longer-term chart you can see that we are still very much in a downtrend despite the fact that we have bounced as hard as we have. Ultimately, you have to ask questions of the last two weeks of the year anyway, because there could be a certain amount of short covering going on in that lifted the British pound. (You can make a fairly significant argument about this being the way across almost all British pound related pairs.)

This week will be crucial for this pair, because it will give us a bit of clarity, especially once we get through the jobs number on Friday. Although it has been very bullish as of late, we are still very bearish longer term, so this thing will have to prove itself to get me to start buying again. In the meantime, I think if nothing else, gravity probably wins out for a while.

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