The British pound pulled back during the trading session on Friday, as we had peeked above the 1.37 handle, but continue to look at that area as major resistance. At this point, I need to see the market break above the 1.3750 level to open up the door to a longer-term position that goes looking towards 1.40 level. At this point, the market just seems a little stretched and of course there were concerns about lighter than expected economic numbers coming out of the United Kingdom during the session, and of course Prime Minister Boris Johnson suggesting that a 500 GBP direct payment to Britons was not going to happen. This suggests that we will continue to see slowing retail sales and a country that is completely locked down in parts.
GBP/USD Video 25.01.21
Furthermore, the US dollar is getting a little bit of a bid due to interest rates are rising in the United States, so it does make the greenback a little bit more attractive. Ultimately though, this is a market that continues to grind back and forth in a bit of an easily defined upward channel, but I think a couple of days; worth of negativity may help this market build the necessary momentum to continue going higher. The 1.35 level underneath could make a significant support level for the market, especially as the 50 day EMA is also approaching that level. The market continues to see a lot of volatility, but I do think that the upward pressure is something that should be paid close attention to. All things being equal, I do believe in the uptrend over the longer term, but a correction makes quite a bit of sense.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire