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- GBP/USD Outlook – Less Uncertainty and a Soft USD Backdrop.
- EUR/GBP Outlook – Modest GBP Upside Against EUR on a Trade Deal.
There is a long-standing argument among market analysts - which is more important, technical, or fundamental analysis? This argument can go on for a long time but in the case of Sterling over the past few months, fundamentals – Brexit and Covid-19 – have been the main drivers of price action. What lies ahead?
Technical vs Fundamental Analysis in Forex Trading
One of the most liquid trading pairs, GBP/USD is closing the final quarter of the year on the front foot with gains of over 4%. EU-UK trade negotiations are going down to the wire with an outcome not known at the time of this analysis, though, the expectation is that a thin deal will be announced. That said, in such a scenario, reduced political headwinds in the short run for GBP/USD, alongside a softer USD environment may well further initial gains towards 1.3700. However, as optimism rises that a deal can be reached, there is always the risk of a “buy the rumour, sell the fact” response (this same dichotomous response played out after the 2019 General Election).
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GBP/USD Monthly Chart
![GBPUSD chart](https://a.c-dn.net/b/30CG8R/Sterling-Q1-2021-Forecast-GBPUSD-Closing-a-Tumultous-Year-on-the-Front-Foot_body_Picture_1.png)
Change in | Longs | Shorts | OI |
Daily | 3% | -7% | -3% |
Weekly | 4% | -10% | -5% |
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