GBP/USD to Top 1.38 if Resistance Breaks

GBP price, news and analysis:

  • Like many other currencies, GBP is benefiting from a risk-on move in the markets on hopes that US President Joe Biden will be able to push all or most of his $1.9 trillion stimulus program through Congress.
  • For now, GBP/USD continues to struggle to make a sustained break above resistance at 1.37.
  • However, if it does, there is little further resistance until well above the 1.38 level.

GBP/USD still struggling at just above 1.37

After several failed attempts to break through resistance just above 1.37, there is a chance now that GBP/USD will pull back. However, a general risk-on move in the markets should lead to a sustained break higher, bringing the 1.38 level and above into focus.

Currently, sentiment in the currency markets is good, benefiting from signs of a smooth transition of power in the US from the Trump Presidency to the Biden Presidency. Moreover, there are hopes that Joe Biden will be able to push all or most of his $1.9 trillion stimulus package through Congress as more Republicans decide to work with him.

That has led to more money flowing from the safe-haven US Dollar into riskier assets such as stocks and also into risk-on currencies including GBP.

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GBP/USD Price Chart, Two-Hour Timeframe (December 31, 2020 – January 21, 2021)

Latest GBP/USD price chart.

Source: IG (You can click on it for a larger image)

If that optimism persists, a sustained break by GBP/USD of the resistance just above 1.37 shown on the two-hour chart above should lead to a swift move to 1.38 or higher as the pair continues to climb within the upward-sloping channel that can be seen on the daily chart below.

GBP/USD Price Chart, Daily Timeframe (September 8, 2020 – January 21, 2021)

Latest GBP/USD daily price chart.

Source: IG (You can click on it for a larger image)

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Meanwhile, UK consumer confidence, public sector borrowing and retail sales data are all due Friday but there will be more attention on the January PMI figures due later in the day that are all expected to be lower than in December; potentially reducing the current bullish mood in Sterling.

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily -21% 14% -3%
Weekly -4% 5% 1%

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— Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

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