GBP/USD – 1H.
Good afternoon, dear traders! On Friday, the pound/dollar pair reversed in the favor of the US dollar on the four-hour chart. The pair fixed below the uptrend channel. Thus, traders' sentiment changed for the bearish one. That is why the pair may continue falling towards the 61.8% correctional level of 1.3820, if it closes below 1.3900. In general, during the previous weeks, investors were monitoring a rise in the US treasury bonds yields. Most analysts suppose that the recent jump in the US dollar was caused by higher yields of the US 10-year bonds. Of course, there is a particular interdependence between the indicator and the greenback's price. However, I believe that it is not strong. This could be proved by the fact that during the last week, the British pound increased along with the rising US treasury bonds yields. Thus, I suppose that the influence of the indicator on the US dollar totals 30%. Unfortunately, traders did not pay significant attention to the macroeconomic reports unveiled on Friday. For example, the UK GDP data for January was really important. The indicator dropped by 2.9%. However, the final data exceeded the forecast.
At the same time, the UK industrial production report was rather weak. The figure turned out to be negative and below the expectations. On Friday, the pound sterling was mainly dropping. Thus, traders ignored the reports. Moreover, on the chart, we can see that during the previous weeks, the pair was hovering between the levels of 1.3780-1.4000. The sideways channel is quite wide of 200 pips.
GBP/USD – 4H.
On the four-hour chart, the situation is more obvious. The pound/dollar pair again dropped to the upward line of the trend and bounced from it. However, it failed to move far away from this line. Thus, we can see bearish sentiment on this chart. However, the pair could close below the trend line anytime. This may boost the US dollar and cause a new slump towards the 127.2% correctional level of 1.3701.
GBP/USD – Daily.
On the daily chart, the pair is still hovering above the upward line of the trend. The sentiment is likely to remain bearish in the long term. If the pair closes above the 127.2% Fibonacci level of 1.4084, the price may continue rising towards the 161.8% correctional level of 1.4812.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair closed above the second downward line of the trend. Thus, the likelihood of the pound's long-term advance are increasing.
News overview:
On Friday, the UK disclosed such reports as GDP, industrial production, and visible trade balance. However, as I have already mentioned above, traders ignored this information.
Macroeconomic calendar for the US and the UK:
On Monday, the macroeconomic calendar is completely empty. Thus, today, the news flow will have no influence on the currency market.
Commitments of traders report:
The recent COT report from March 9 was really interesting. A week earlier, I mentioned that reports on the euro and the British pound were opposite. This time, sentiment of non-commercial traders of the pound sterling became more bearish. During the given period, speculators closed 5.5 thousand long contracts and opened 344 short contracts. Thus, big players do not have hope for a further rise in the British pound. However, traders of the euro are much more pessimistic. In other words, the pound sterling has fewer chances for a fall and more chances for a jump in comparison to the euro.
Forecast for GBP/USD and recommendation for traders:
It is possible to buy the British pound after a bounce from the 50.0% level of 1.3900 on the one-hour chart with the targets at 1.3980 and 1.4079. Traders may open sell positions, if the pair closes below the trend line on the four-hour chart with the targets of 1.3820 and 1.3721.
Terminology
"Non-commercial" traders are major market players such as banks, hedge funds, investment funds, private, and large investors.
"Commercial" traders are commercial enterprises, firms, banks, corporations, companies that buy foreign currency not for speculative profit, but to support current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.