GBP/USD Price Forecast – British Pound Continues to Rise Upon Optimism

The British pound initially pulled back during the trading session on Tuesday only to turn around and show signs of strength again. At this point in time, the market looks as if we are trying to reach towards the 1.34 handle, perhaps even the 1.35 level. If we can break above the 1.35 level, then the market is likely to continue to go much higher, as breaking above that level on a daily close would be a huge move to the upside. Short-term pullbacks should be a nice buying opportunity, as we continue to see hope burns eternal in this market.

GBP/USD Video 16.12.20

To the downside, the 50 day EMA is approaching the 1.3250 level, an area that of course is an important level from previous bouncing and therefore it makes quite a bit of sense that we should see value hunters in that general vicinity. Ultimately, this is a market that is almost impossible to short because the market is trying to build into the expectations a deal, and it should be noted that the negotiators are willing to talk in ad infinitum, so that suggests that we will continue to see hope in this market.

If we can break above the 1.35 handle on a daily close, that could open up a move to the 1.3750 level, possibly even the 1.40 level over the longer term. However, if we were to break down below the 1.30 level and by extension the 200 day EMA, it is likely that we could go quite low from there, perhaps down to the 1.25 handle but that will almost certainly be due to the Brexit situation deteriorating completely.

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