GBP: more strength to come?

GBP: more strength to come?

2021-03-12 • Updated

What?

Daily charts of GBP/USD and EUR/GBP show a very confident British pound that keeps appreciating over its peers in the Forex market. A prudent trader might think "well, maybe, it's about time the bullish rally for the pound is over"?

Observers say not necessarily. Moreover, they point to a very possible scenario where the British pound appreciates even more.

Why? 

First, the UK economy is not as bad as you might think. Against the market expectation of a 4.9% contraction in January, the UK GBP fell only 2.9%.

Second - and that's one of the contributing factors to the point above - the rapid vaccinations rollout does its job in the UK. That brings a holistically positive effect to the entire British economy. 

Third, economists comment that the high tide for aggressive tech-sector stocks is getting over, and inspired by the recovery, global investors shift to more traditional value stocks - which is what most UK stocks are. Indirectly, that spurs demand for the GBP, too. 

These are valid points in favor of the GBP's strength - especially if you go long-term

What to say? Godspeed, GBP, we go together to ride a bullish wave - more upside!

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