Hello, dear traders!
Last week was not the best time for the US dollar. It weakened against the basket of all major currencies but for the Japanese yen. The GBP/USD pair strengthened considerably during trading on March 8-12, gaining 0.71%. The currency pair came third among the majors that increased in price last week. Meanwhile, this week is likely to define a further movement of GBP/USD since both the Fed and the BoE will announce their decision on monetary policy and interest rates.
At the same time, after Brexit, the turnover between the UK and the EU has dropped sharply. The new trade relations between the parties triggered a 40.7% plunge in the UK's exports with the exception of precious metals. The reasons for the decline are the end of the Brexit transition period and the national lockdown in Britain aimed to curb the spread of the COVID-19 pandemic. As a reminder, the United Kingdom officially left the European Union at the beginning of 2021. Now, let's take a look at the price charts.
Weekly chart
Despite the upward trend during the previous trading week, bulls failed to close above the important and strong resistance level of 1.4000. Right now, this mark has repeatedly provided significant resistance to the price and does not let it go higher. I assume that the decision of both regulators will either boost the pair above 1.4000 or trigger a sharp fall in price. If the price closes above 1.4000 at the end of the current trading week, the next important target for bulls will be seen at 1.4231. I believe that the upward trend on GBP/USD will extend in the mid term only if the price breaks this barrier and consolidates above it. Meanwhile, bears should trade below 1.3700 and break through the lower border of the upward channel. If so, the upward trend will reverse because the lower border of the channel is also the line of the upward trend. Generally speaking, it is difficult to say how the price will behave further based on the weekly chart.
Daily chart
Despite a sharp decline on Friday, GBP/USD has partially recouped its losses. This fact is confirmed by the long lower shadow of the candlestick for March 12. At the time of writing, the currency pair is trading between the red Tenkan-sen and the blue Kijun-sen. They are support and resistance respectively. Most likely, a breakout at one of these lines will mark the beginning of a new price movement. However, it is still unclear which direction the price will take. Currently, the pair is trading in the 1.3856-1.4004 range. One should consider opening long and short positions closer to the support line of 1.3856 and below the resistance level of 1.4000 respectively. Sooner or later, any currency pair leaves its range. Therefore, cautious traders should wait for the price to leave the 1.3856-1.4004 corridor and then open positions in the direction of a breakout at the time of a pullback to one of its broken borders.
Have a nice trading day!