Although it seems that the market will continue to be quiet for a while, let’s take a look at the most important GBP pairs and see if we can predict something about their next movements.
A new year has come; and with just one week, it has already brought us big news. When it seemed that Brexit was going to be the source of news for the next weeks, we had the storming of the Capitol by Donald Trump’s followers.
GBP/USD for January 2021
In our December prediction for the pair GBP/USD, the forecast was the pair was going to be bearish in the next weeks. We emphasized that it was a long-term prediction, but the price has done just the opposite of what we expected. A few days ago, on January 4, it broke the stop-loss we set at 1.3685, and now the trade is closed. Just after that, the price went down, and it closed at 1.3569. This could have been just a test to the resistance, and it may still be active since we have not had any close above it; but when we set the strategy, we decided to close if the price 1.3685 was touched, and we stuck to that decision.
If in the coming days the price closes above 1.3685, it could mean the price shows enough strength as to test next resistance that is in the range of 1.42 to 1.4380. Should the price go beyond that level, it could go up to 1.46; but for now, we would just look to the next level.
Looking down, the next support is 1.2940 and beyond that 1.2150.
In the very long-term, GBP/USD is in a downtrend, and we expect it to retake it at some point. Since the MACD has given a sell signal and the price seems to have stopped in the resistance, our prediction is still that is more likely for the price to go down than up. Now the stop-loss could be at 1.3705 with an objective of 1.35, which does not give us a good profit-loss ratio, so it is not a trade we would take.
This article was written when the GBP/USD was at 0.9048 on January 7.
EUR/GBP for January 2021
Since mid-May 2020, the pair EUR/GBP has been more or less quiet in a sideways movement between 0.8850 and 0.93, but most of the time it has been limited to 0.92 on the upper side.
When something like this happens after such a long time, we cannot expect anything different with its continuation until the price clearly breaks the previously cited levels. So for now, our prediction is that the sideways movement will continue and that a price close to 0.8850 is a chance to buy and a price slightly above 0.92 is the same to sell.
This article was written when the EUR/GBP was at 0.9048 on January 7.