According to the hourly chart, the GBP/USD pair made another attempt on Friday to consolidate above the correction level of 161.8% (1.3181) but again failed to do so. Thus, this level keeps the British from strengthening more than what we have seen in the last week. From my point of view, a lot also depends on geopolitics for the British now. Let me remind you that last week, two meetings of regulators took place at once - the British and the American. Although both central banks raised the interest rate, there were no serious movements that could lead to the formation of a new trend. On the contrary, quite unexpectedly, the British dollar fell after the Bank of England raised the rate. And it began its fall from the level of 1.3181. Therefore, I can assume that the bears are defending the level of 1.3181. Every time the price approaches it, they start selling. Thus, I believe that this week the British will again tend to fall.
If last week, when there were a lot of important events, the bulls failed to seize the initiative, then this week they will have fewer chances. Of the important reports this week, I can only single out the consumer price index in the UK, which will be released on Wednesday, March 23. Most likely, inflation in the UK will continue to rise, but what can this mean for the British pound in the current conditions? From my point of view, nothing. Traders, of course, will react to it if they see a value above 5.5%. But this reaction will be very short-lived. I would say that now a lot depends on the level of 1.3181. If the bulls still manage to push it through, then the bears may begin to retreat from the market. But even in this case, the bears must begin to retreat, and not, on the contrary, begin to exert additional pressure. Jerome Powell is going to give a speech in America today, and it might be interesting. But everything will depend on what new information the Fed president shares. The rate has already been raised, no one doubts that it will continue to grow in 2022.
On the 4-hour chart, the pair performed a reversal in favor of the British currency after the formation of a bullish divergence at the MACD indicator and continues the process of growth in the direction of the Fibo level of 61.8% (1.3274). The rebound of quotes from this level will allow us to expect a reversal in favor of the US currency and a slight drop in the direction of 1.3044. There are no new brewing divergences now.
Commitments of Traders (COT) Report:
The mood of the "Non-commercial" category of traders has changed dramatically again over the last reporting week. The number of long contracts decreased in the hands of speculators by 18,540, and the number of short - by 2005. Thus, the general mood of the major players has become even more "bearish". Thus, everything is in order now, and the ratio between long and short contracts for speculators corresponds to the real state of things. The British dollar is falling, and the big players are selling the pound more than buying it. At this time, the difference between the number of long and short contracts for speculators is twofold. Thus, I expect the pound to continue its decline.
News calendar for the US and the UK:
US - Chairman of the Fed Board of Governors Jerome Powell will deliver a speech (16:00 UTC).
On Monday, the calendars of economic events in the United States and Great Britain contain one interesting entry for two. Jerome Powell's speech can certainly affect the mood of traders.
GBP/USD forecast and recommendations to traders:
I recommend selling the British when rebounding from the level of 1.3181 on the hourly chart with a target of 1.3071. I advised buying the British when closing above the trend line on the hourly chart with a target of 1.3181. This goal has already been worked out three times. New purchases are above the level of 1.3181 with a target of 1.3279.