Greetings, dear traders!
In this article, we are going to analyze the GBP/USD pair by summing up the results of last week. We will also try to predict the further dynamics of the pound/dollar pair. I will start the review with the fact that during last week, the US currency suffered hefty losses against its main competitors. In particular, versus the British currency, the US dollar weakened by 0.99%. Many experts reckon that after the UK leaves the European Union, the British economy will face serious problems, dragging the pound sterling down. However, these doom and gloom forecasts do not coincide with real facts. On the contrary, the situation is brightening up in the country. Unlike the EU, the UK can boast of the quicker pace of vaccination against COVID-19. It fosters the growth of the pound sterling across the board. For instance, on the charts, we can see that the pound sterling advanced significantly against the euro.
Importantly, the dynamics of the euro/pound pair have a significant impact on other major pairs, such as EUR/USD and GBP/USD. As for the fundamental factors, the macroeconomic reports from the UK and the US, which have been recently released, can in no way be called negative. Sometimes, they might be a bit twofold but the results are quite promising. For example, the US consumer price index, which was unveiled last week turned out to be higher than the forecast value. Nevertheless, the US dollar did not gain momentum following the release of this data. Quite the opposite. It faced strong selling pressure. This week, traders are awaiting crucial macroeconomic statistics from the UK, which is sure to influence the pound/dollar pair. Tomorrow, the UK will publish its labor market report. On Wednesday, the consumer price index will be released. The report is sure to affect the British currency as there is speculation that the Bank of England may resort to negative interest rates currency. Let's look at the weekly and daily charts of the pound/dollar pair.
Weekly
Despite the rally of GBP/USD during last week, bulls failed to push the quote to the limits of the ascending channel. Yet, bears were meant to push the pair below the strong support level of 1.3669 but also failed. Another attempt was limited to the level of 1.3667. However, the pair reversed upwards and ended trading on April 12-16 at 1.3835. As for the return of the pair to the limits of the ascending channel, currently, the pair is retreating to its lower limit. However, the question is whether the level was actually broken or it was a false breakout. I hope the situation will clarify soon. As already noted in one of the recent articles on GBP/USD, due to its volatility and speculative nature, the pound sterling often shows false breakouts. So, traders who placed Stop Loss orders have more than once been deceived by false breakout and incurred losses. Overall, bulls and bears are likely to continue their fight. Bulls should push the pair to the limits of the ascending channel. Besides, the pair needs to pass the red line of the Ichimoku Tenkan indicator, which is located at 1.3950. Then, it should break through very strong and important resistance levels of 1.4000-1.4015. Bears need to push the pair to the level of 1.3800 and then to 1.3700. If so, the quote needs to break through the support level of 1.3667.
Daily
The high volatility of the pound sterling can be seen on the candlestick for April 16. On the chart, the fierce struggle between bears and bulls is shown. In my opinion, bulls still have a fairly tangible advantage. Given this factor, as well as repeated and futile attempts to break through the support level of 1.3670, I am betting on a bullish scenario, it is recommended to open long positions on the GBP/USD pair on short-term declines to 1.3810, 1.3790, and 1.3777. If the bearish reversal patterns of the candlestick analysis start to appear under the resistance level of 1.3844, 1.3950 and 1.4000, this will be a signal for opening short positions. It is also recommended not to place your orders at extremely high or low levels. Manage your orders within the limit of 40-50 pips.
Good luck!