FX.co ★ GBP/USD: technical analysis on March 13, 2023

Hello, dear traders! According to the 1-hour chart, GBP/USD extended gains on Friday. In fact, growth, which initially was an upward correction, began on Wednesday. It was triggered by Powell's testimony in Congress on Tuesday. On Friday, however, the pair entered a sideways corridor. The quotes are now trading near the corridor's upper limit. If the price bounces off this line, the bear move will resume toward the lower line of the corridor. However, should the pair close above the corridor, growth will extend toward 1.2238.

Friday was a busy day in the market due to the release of macro statistics in the US and the UK. Thus, the UK's industrial production declined by 0.3% m/m in January, and GDP climbed by 0.3%. Clearly, the GDP report was of primary importance. Moreover, quarterly results carry greater weight than monthly. The pound sterling encountered some support early on Friday and strengthened against the greenback. Anyway, all eyes are now on statistics coming from the US.

Nonfarm Payrolls and unemployment will have a direct impact on the FOMC meeting on March 22. All in all, the macro data delivered in the US on Friday can hardly be called disappointing enough for the Fed to adopt a dovish stance. Last week, traders hardly knew how to behave. On Tuesday, they grew increasingly optimistic when Chair Powell hinted at a 0.50% rate hike in March. On Friday, however, they lost almost all hope. In other words, traders hardly imagine the US central bank's future steps. Meanwhile, the greenback hardly has any reason to extend the bear move.

In the 4-hour time frame, the pair reversed and headed toward 1.2250 but was already outside of the descending trend corridor. Market sentiment turned bullish, indicating a bullish continuation despite the weaker greenback. Neither of the technical indicators shows divergence today.

Commitments of Traders:

The bearish sentiment of non-commercial traders decreased last week. However, we are still talking about reports from a month ago. The CFTC has not provided fresh data yet. Speculators opened 3,277 new long positions and 4,898 short positions. Overall, sentiment remained bearish with a wide gap between shorts and longs in February. Although the pound sterling has limited growth potential now, it is in no rush to go down. In the 4-hour time frame, the pair left the limits of the descending corridor, which may provide support for the greenback. In fact, there are now many contradicting factors, as well as there is no consensus among traders.

Macroeconomic calendar:

The macroeconomic calendar is empty on Monday, with no releases scheduled both in the UK and the US. Therefore, fundamental factors will unlikely have any influence on the market.

Outlook for GBP/USD:

The trading plan will be to sell after a bounce off the upper limit of the sideways corridor in the 1-hour time frame, with targets at 1.2007 and 1.1928, as well as to buy after the close above the corridor, targeting 1.2238.