GBP/USD is one of the most actively traded currency pairs in the foreign exchange market. It represents the exchange rate between the British pound and the US dollar. As with any currency pair, its value is subject to fluctuations based on a variety of economic and geopolitical factors. These can include interest rates, inflation rates, political events, and more.
Current Selling Bias in GBP/USD
Recently, there has been a selling bias in GBP/USD. This means that more traders have been selling the currency pair than buying it, causing its value to decrease. According to Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group, this selling bias is expected to lose traction beyond the 1.2475 level.
Potential for Upward Momentum
Leang and Chia predict that once GBP/USD passes the 1.2475 level, there could be a shift in the selling bias, with potential for upward momentum. This means that more traders could start buying GBP/USD, causing its value to increase.
Factors Contributing to the Shift
There are several factors that could contribute to the potential shift in the selling bias of GBP/USD. One is the progress of Brexit negotiations. The UK’s departure from the European Union has had a significant impact on the value of the British pound. If negotiations go well and a favorable deal is reached, it could boost confidence in the pound and attract more buyers.
Another factor is the ongoing COVID-19 pandemic. While it has had a negative impact on the global economy, there are signs of recovery in some areas. If the situation continues to improve, it could have a positive effect on the value of both the pound and the dollar.
Finally, interest rates are always an important consideration when trading currencies. The Bank of England has already cut interest rates to historic lows in response to the pandemic. If the economy continues to recover, however, it may be necessary to raise interest rates again. This would make the pound more attractive to investors and could contribute to upward momentum.
Conclusion
While there is no way to predict the future value of GBP/USD with certainty, the analysis of Leang and Chia suggests that there may be potential for upward momentum beyond the 1.2475 level. Traders should keep an eye on Brexit negotiations, COVID-19 developments, and interest rate decisions in order to make informed decisions about trading GBP/USD.
