FX.co ★ Overview of the GBP/USD pair. March 12. Markets can breathe freely: the yield of 10-year Treasury yields has started to fall

4-hour timeframe

Technical details:

Higher linear regression channel: direction - upward.

Lower linear regression channel: direction - sideways.

Moving average (20; smoothed) - sideways.

CCI: 61.1506

The British currency continued its not too strong upward movement over the past day. Thus, at the moment, a new upward trend has formed for the pair, which may well mean the resumption of the global upward trend. From our point of view, nothing has changed fundamentally for the pound/dollar pair recently. Traders still tend to make purchases for which there is no reason. Especially if you look at the state of the British economy and its geopolitical problems. However, the year 2020 and the beginning of 2021 should have taught traders that they do not always need specific and clear reasons for a particular asset to grow in price. Bitcoin has once again shown the world that a couple of tweets on social networks will be enough to increase the price by $ 10,000. Pound sterling thought about it and concluded that it could do the same. Therefore, as a result, the British currency has been growing for more than 5 months almost non-stop and almost without a rollback. This is not strong growth, but a moderate one. But it is stable and raises a lot of questions. We have already talked about the UK's economic and geopolitical problems a dozen times. Now is the time to analyze the US fundamental background, because it can be the driver for the pound/dollar currency pair in the coming months.

When we talk about the fundamental background from the US, at the moment it all comes down to a new package of stimulus measures, which was approved by Congress for the second time yesterday. Now the bill is sent for signature to Joe Biden, who has already managed to say that in the near future, Americans will begin to receive checks for $ 1400. Thus, the American economy will begin to flood with almost $ 2 trillion more literally in the coming weeks. From our point of view, this is a very good reason for traders to start getting rid of the US currency again. More precisely, you don't even have to get rid of it. Dollars will simply become 2 trillion more, so the exchange rate of this currency will begin to fall. And if market participants also start to get rid of this currency, then the fall may be even stronger. We believe that the factor of a sharp and powerful increase in the volume of the money supply is the most significant over the past year. It is thanks to him that the US currency has been experiencing serious problems over the past year. In a pair with the pound sterling, the "speculative" factor also continues to work, because nothing else can explain the strong growth of the British pound and the absolute disregard of the negative background from the UK by the markets. Thus, despite the failed fundamental background from the Foggy Albion, we believe that the British pound has an excellent chance of resuming the upward trend and conquering new heights.

As for other factors that usually affect the movement of the pair, now no one pays attention to them. Macroeconomic statistics still excite traders in so far as they are concerned. There are no global political factors in Britain or the United States at the moment. The main newsmaker of America, Donald Trump, has been out of business for the second month. And data on the rate of vaccination or the number of new cases of the "coronavirus" has long been of no concern to anyone. Hence the conclusion, in global terms, the pound/dollar pair continues to be influenced only by the ratio of money supply volumes in Britain and the United States. And this factor may soon begin to provide serious support to the British currency.

Separately, I would like to say about such a factor as the growth in the yield of American treasuries. In the past two weeks, most traders and analysts have directly attributed the strengthening of the US currency to the rise in the yield of 10-year US Treasury bonds. So, this indicator has been falling in recent days and is already less than 1.5%. Thus, the markets can exhale and not pay more attention to this indicator, as they did not pay attention to it during the previous year or more. Even if you look at the yield chart and the pound chart, you can see that there is no correlation between them.

The average volatility of the GBP/USD pair is currently 109 points per day. For the pound/dollar pair, this value is "high". On Thursday, March 11, therefore, we expect movement within the channel, limited by the levels of 1.3802 and 1.4020. A reversal of the Heiken Ashi indicator downwards may signal a new round of downward movement.

Nearest support levels:

S1 – 1.3855

S2 – 1.3794

S3 – 1.3733

Nearest resistance levels:

R1 – 1.3916

R2 – 1.3977

R3 – 1.4038

Trading recommendations:

The GBP/USD pair continues its upward correction on the 4-hour timeframe. Thus, today it is recommended to open sell orders with targets of 1.3855 and 1.3802 if the price is fixed back below the moving average line. It is recommended to consider buy orders with targets of 1.3977 and 1.4020, as the price is fixed above the moving average.