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GBP/USD nears 2020 high as investors eye 1.40

Fawad Razaqzada Fawad Razaqzada 13/01/2021
GBP/USD nears 2020 high as investors eye 1.40 GBP/USD nears 2020 high as investors eye 1.40
GBP/USD nears 2020 high as investors eye 1.40 Fawad Razaqzada
Risk ON sentiment remains the dominant theme this morning with a focus on value stocks and other assets sensitive to rise amid ongoing optimism about more normal times ahead with the rolling out of Covid vaccines. In FX, the pound continues to outperform after a no-deal Brexit was prevented at the back end of last year.  Sterling has been given a further lift by ongoing risk rally, which is helping the GBP/JPY to test fresh multi-month highs this morning and the GBP/USD is nearing its 2020 high at 1.37ish. There is not a lot on the agenda on the macro front with Eurozone Industrial Production coming up at 10:00, followed by US CPI at 13:30 and US oil inventories at 15:30 GMT.

With the pound starting to look strong at the start of this year, I reckon it could be among the best-performing major currencies in the months ahead now that a no-deal Brexit has been avoided. With the UK also being among the first countries to roll out the Covid vaccines, this could see the economy rebound sharply once lockdowns end, providing sterling an additional boost.

It is also pointing out the fact that the FTSE could be in for a major breakout after spending the last few years inside of a large corridor between 1.20ish and 1.40ish. This side-ways consolidation was due to Brexit uncertainty, but now that this cloud has been lifted, we could be in for move outside of this large range. This makes the pound even more appealing in my view.

As I pointed out the possibility earlier this week HERE, the GBP/USD managed to hold and then bounced from around the key 1.3480 support area. With the bulls having defended their ground successfully, this means that the path of least resistance continues to be to the upside:
 
GBP/USD
Source: ThinkMarkets and TradingView.com

From here, the next potential upside target is last year’s high at 1.37ish. If we break and hold above this area then the next upside targets would be the round handles at 1.38 and 1.39, with the psychologically-important 1.40 handle being the ultimate near-term objective. But as I said, the rally could extend to significantly higher levels over time. For those looking to sell the pound, I currently do not see much technical reasons to do so given the overall bullish price action. The bears will certainly need to see a proper break down in the market structure of higher highs and higher lows first.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Meet our contributors
Mohammed Zidan
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Mohamed Zidan
Chief Market Strategist, Dubai

Mohamed Zidan is a chief market strategist in Dubai and CFA Level III candidate. He reports to London office and has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis. worked as FX Analyst, and Strategist in several different organizations and for various departments. He holds a bachelor’s degree from Cairo University in Egypt. Mohamed Zidan is a regular guest on several major TV networks such as; CNBC Arabia, Fran24 Arabic, Alarabiya , Dubai TV, Sama Dubai, Skynews Arabia, Saudi National News, and Egypt National news.

Zidan presents insight to the markets movements, holds open discussions and relays possibilities related to the world’s financial market and economies.

Mohamed Zidan has been invited as a guest speaker for several international seminars. Zidan provides daily and weekly outlook for the markets. His experience ranges from currencies, commodities, stocks and options. he applies a top-down, global macro approach combined with price action to generate trade ideas and anticipate the next move.

Victor Golovtchenko
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Victor Golovtchenko
Global Macro Analyst, Sofia

Victor Golovtchenko has been analysing and trading foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor at a major brokerage industry news outlet was followed with a breakthrough into the financial news space with the brand new TradeStar website.

As an affectionate macro-focused analyst, he has an integrated framework to look at financial markets as a whole, identifying gaps between currencies, stocks, bonds, and other asset classes to get a core complete picture of the macroeconomic environment.

Fawad Razaqzada
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Fawad Razaqzada
Market Analyst, London

Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Mohammed Zidan
Mohamed Zidan
He has more than eight years of experience focusing on Forex, Commodities, Indices and global economic developments as well as central bank policies and intermarket analysis.
Victor Golovtchenko
Victor Golovtchenko
Victor Golovtchenko has been trading on the foreign exchange markets since 2004, and is actively involved in the online media space since 2014. His tenure as a Senior Editor follows his role with TradeStar.
Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.

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Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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