GBP/USD Likely Heading To 1.40s
Fawad Razaqzada | Jan 05, 2021 02:41PM ET
The GBP/USD is currently stuck between a rock and a hard place, but I think it will rise further over time. Although right now it is facing resistance due to fears over the economic impact of the latest national lockdown, the downside looks to be limited.
I think the cable will be provided stronger support because:
- investors are unwinding their bearish bets over a no-deal Brexit, which has been avoided
- the dollar is continuing to remain under pressure, which is also why I think gold and silver are heading sharply higher (as I outlined in THIS video)
- the rollout of vaccines will probably help the UK become one of the first major developed economies to go back normal – hopefully in the not-too-distant future!
Momentum is another factor that could support the cable’s recovery – especially if it remains above the breakout level of 1.35ish:
Currently, GBP/USD is trying to form a base after Monday’s sell-off. But if the buyers step in around current levels, as I think they will, and we make a new high for the year, then that could ignite fresh momentum buying to take us towards and possibly above the 1.4000 hurdle next.
While there is obviously a risk that rates could break down in the short term, I am currently not entertaining any bearish trade ideas for the price structure remaining bullish given the higher highs and higher lows. If that were to change in the future, then I will, of course, change my mind. However, as things stand, the path of least resistance remains to the upside.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.