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Buying or Shorting USD/GBP? Technical support & resistance

January 19, 2021 00:21
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GBP, USD,

Today, Short Selling will discuss the latest important news connected with USD/GBP and how to short or go long in this currency pair.

Markets are easily affected by unpredictable events, and most traders are now taking advantage of declining needs. The market continues to dump the US dollar as the US is getting more and more difficult with a sharp rise in unemployment, and the Fed would probably not hike interest rates in the upcoming years.

The latest changes for USD vs GBP

The USD/GBP pair is weakening last several months as speculative interest keeps selling the greenback. The US dollar is also under pressure because the US Congress delayed the discussion on increasing coronavirus relief's direct payments. The ongoing uncertainty, together with the COVID-19 pandemic, could add another selling pressure for the US dollar. The US policymakers indicated unprecedented levels of uncertainty over the economic future, but according to analysts, the USD's situation could be better at the beginning of 2021 year. On the other side, the UK Parliament will vote on the post-Brexit deal with the EU, which is expected to pass according to analysts. Despite tough restrictions, the UK reported a record of over 53K new coronavirus contagions on Tuesday, and the number of death surpassed 71K. The UK has approved the emergency use of the AstraZeneca vaccine last week and will start applying it at the beginning of next week. Combined with the Pfizer vaccine currently in use, the country has an ambitious plan to vaccinate 2 million people per week. If you are looking for trading this pair, we recommend eToro for American visitors and Capital for the rest of the world.

How to short USD/GBP

The USD/GBP is losing its value, and this currency pair reached its fresh multi-month lows below the 0.7308 level. My opinion is that there will certainly be lots of opportunities for shorting this currency pair in the upcoming weeks. Shorting the USD/GBP is basically betting against this currency pair, and when you short the USD/GBP, you are expecting the price to go down instead of up. So you can make money when the price goes in the opposite direction, and for those with great skill is a way to make some good money. One of the easiest ways to short USD/GBP is through a margin trading platform. Many brokers allow this type of trading, with margin trades allowing investors to “borrow” money from a broker to make a trade. It's important to remember that there may be a leverage factor, which could either increase your profits or your losses. It's not a good idea to hold a short position for long periods or to leave an open short position with no stop-loss order. Many exchanges allow margin trading, but it is very hard to say which platform is the best because this depends on each investor/trader's experience and habits.

Technical analysis

The GBP/USD has weakened below 0.7308 last trading week, the risk of further declines is not over yet, and the major trend is still bearish (downtrend). The global political tensions also have a big influence on this pair, and the pair needs to fall below the 0.7300 level to extend moves lower. I marked support and resistance levels – 0.7400 represents the current resistance level, 0.7300 and 0.7200 are the current support levels on this chart. If the price jumps above 0.7400, it would probably reach the 0.7450 level very soon; the next target could be located around 0.7500. If the price falls below 0.7300, that could be a very good opportunity for the short- term traders; short-term traders can put the stop loss at 0.7315 and take profit at 0.7270 or below.

Conclusion of USD/GBP trading, 2021

The USD/GBP is losing its value, and this currency pair reached its fresh multi-month lows below the 0.7308 level. The US Federal Reserve left interest rates on hold, and the market continues to dump the US dollar.

The Federal  Reserve announced that it would continue to buy Treasuries and mortgage-backed securities “at least at the current pace” over the coming months. The Federal  Reserve is ready to use its full range of tools to support the US economy, and interest rates will remain at current levels until 2022. The global political tensions have a big influence on this pair, and the pair needs to fall below the 0.7300 level to extend moves lower. If the price falls below 0.7300, that could be a very good opportunity for the short- term traders; short-term traders can put the stop loss at 0.7315 and take profit at 0.7270 or below.

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