FX.co ★ Technical analysis and forecast for GBP/USD on March 18, 2021

The GBP/USD pair showed a moderate growth yesterday, which is primarily due to the events associated with the US Federal Reserve System (FRS). The details for this are discussed in the EUR/USD pair analysis. In my opinion, the Federal Open Market Committee (FOMC)'s updated economic forecasts and the Fed Chairman, J. Powell's subsequent press conference did not contribute to the strong weakening of the US currency, but the market decided everything, so it did what it actually believed in. Today, there are still important events for the GBP/USD pair. It is worth noting that the Bank of England will make its decision on rates, the volume of the asset purchase program, and will also publish an accompanying statement at 12:00 Universal time. Similarly to the Fed, British Central Bank's monetary policy is expected to remain the same. The base rate is expected at the same level, that is, at 0.10%, while the monthly asset purchase program will remain at around 875 billion pounds. In this situation, market participants will mainly focus their attention to the accompanying statement, namely, how the votes of the members of the BoE's Monetary Policy Committee were distributed in making the decision.

In terms of the US data, investors will focus their attention to the weekly data on initial unemployment claims. At this point, today's fundamental factor is considered to be done, and it is time to proceed on the price charts.

Daily

It became clear that the market was not willing to decline following the emergence of the March 16 candlestick with a long lower shadow, which can be characterized as a reversal pattern of candlestick analysis. In this case, it was inclined to rise and it definitely did. However, there are no important and significant changes yet in the technical picture of GBP/USD pair. Initially, this concerns the inability of the pound bulls to break through the strong resistance of the sellers, which is seen around an important psychological and technical level of 1.4000. Nevertheless, bulls will have another chance to rise to this important level after today's decision of the Bank of England. If it does, then the way to upper levels will open. Naturally, this will only happen if investors are not disappointed with the decision and comments of the Bank of England and react positively to them. A characteristic technical point is that the blue Kijun line of the Ichimoku indicator, which will clearly strengthen this already strong level, is right at the level of 1.4000.

In turn, the bears' task is associated with the breakdown of the Tenkan red line and most importantly, the very strong support zone 1.3850-1.3800. Given that the 50 simple moving average is located directly below 1.3800, it will be extremely difficult for players to carry out their mission to lower the rate.

One-hour

We can note another important and significant level set at 1.3900 for the GBP/USD pair. Around it, all three moving averages have accumulated: 89 EMA, 200 EMA and 50 MA. We can assume that if the pair declines to the 1.3900 mark, it will find a strong support and reverse up. Considering today's events related to the Bank of England, it can be assumed that there will be an uncertain course of trading, which means positioning in both directions. In this case, it is suggested to buy after a decline to 1.3900, and below from the support zone of 1.3850-1.3800. It is also recommended to get ready for sales near the still impassable level of 1.4000. A false breakout of this level and the closing price of an hourly or four-hour candle with a long upper shadow below 1.4000 will signal this.