Pound-Dollar at 2018 Highs, What are the Next Levels?

The Pound retains a positive bias against the Dollar, with the GBP/USD exchange rate rallying to a new three-month high of 1.35 over the course of the past 24 hours.

The Dollar was down and out for the count against all major currencies Thursday in an ominous sign of what many to come in the year ahead, according to a range of analyst forecast, many of which envisage the U.S. currency as the big loser from a great, global economic recovery in 2021. 

There remains a 30% chance that the EU and UK are unable to strike a post-Brexit trade deal says Mathew Weller, Global Head of Market Research at GAIN Capital. In this article Weller assesses the implications of this and other potential outcomes on the Pound.

The next one to two weeks will prove critical in determining whether the Pound-Dollar exchange rate is able to break into the next phase of its uptrend, according to a new analysis of the market's technical setup.

The Pound-to-Dollar exchange rate had its wings clipped last week after investors were spooked by rhetoric from Brexit negotiators but it could join the Euro and other currencies in clocking multi-year highs over the coming days as the two sides edge toward an agreement.

The Dollar squeezed higher Thursday after the Federal Reserve (Fed) failed to settle a debate over its next policy steps and as European currencies came off the boil, but minutes of November's meeting hinted the bank could be about to target long-term bond yields, which may help keep the greenback on a glide path lower.

The Pound-to-Dollar exchange rate has advanced back toward September highs as expectations of a trade agreement with the EU solidify but the post-Brexit outlook for Sterling is still something that divides opinion in the market. 

The Pound-to-Dollar exchange rate rallied again last week but failed for a second time to overcome a key technical obstacle on the charts and could be in for a setback this week in response to the creeping prolongation of lockdown restrictions in the UK and elsewhere, which are seen offering support to the greenback.