British Pound traders had a crazy week as we fell to the 200 week EMA, near the 1.3150 level. We have since broken above the 1.35 grip, in what has been a very mad rush. It looks like we are nearing the end of negotiations between the UK and the EU, but as I record it we are still arguing over the fish. Ultimately, this is a situation where we continue to go higher, possibly hitting the 1.3750 level.
GBP / USD Video 12.28.20
The biggest problem I have with the pair at the moment is that the UK is locking up its economy, and we eventually need to start focusing on the economy itself, because it sure won’t be pretty. That being said, we are historically cheap so we have a lot of traders who will see this as a potential value game in the longer term. However, that doesn’t mean that it will be easy to get hooked on this trade. If we can get some kind of positive momentum with the UK economy, that might be enough to really shake things up.
On the other side, we have stimulus that, of course, will work against the value of the US dollar. I anticipate we might see a “negative US dollar market”, the UK pound possibly underperforming some other currencies. In other words, it could rise in 2021, but you could see other currencies such as the Australian dollar outperform. At this point, however, it looks like the 200 week black EMA is your support.
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This article originally appeared on FX Empire