GBP/USD – 1H.
Good afternoon, dear traders! On the 1H chart, the GBP/USD pair added gains on Friday. Only tonight the US dollar strengthened against the pound sterling. So, the pair began to decline to the correctional level of 76.4% - 1.3721. If the pair breaks through this level, the pound sterling may climb up. It may even touch the Fibo level of 61.8% - 1.3820. The British pound continues to drop against the US currency, as does the euro. Nevertheless, the pace of vaccination in the UK is much higher than in the European Union. Notably, London signed contracts for the supply of vaccines with manufacturers earlier than the European Union. No wonder, the UK will get vaccines first. The news was bitterly received by the European Union. Interestingly, the block is facing a shortage of vaccines but European pharmaceutical companies send vaccines to the UK.
Last week, Brussels wanted to ban the vaccine export of those manufacturing companies that had not fully fulfilled the contracts concluded with the EU but continued to export vaccines to other countries. Policymakers took a harsh stance on countries that did not export vaccines themselves but at the same time were involved in vaccine import. However, Brussels did not carry out its threats and investors were relieved. The economic calendar lacks any important releases. During his first press conference last week, Joe Biden did not really give answers to the most important questions. The US president did not provide comments on the first results of the adopted stimulus package. He also did not mention the possible tax increase. Meanwhile, in the US, vaccination rates are quite high and the economy is recovering rapidly. This is why the greenback exhibits strength.
GBP/USD – 4H.
On the 4-hour chart, the US dollar strengthened against the pound sterling after the formation of a bearish divergence of the CCI indicator. Thus, the pair may drop to the correctional level of 127.2% - 1.3701. If the pair closes below this level, it is likely to fall to the next Fibo level of 100.0% - 1.3481.
GBP/USD – Daily.
On the daily chart, the pair closed below the ascending trend line. Therefore, in the long term, the bearish bias will prevail. This is an important factor for the future prospects of the British currency.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair closed above the second downtrend line. Thus, the chances of long-term growth of the pound sterling are significantly increased.
News release:
On Friday, the UK released the retail trade report, which turned out to be neutral. Investors also did not pay much attention to US macroeconomic data.
Economic calendar for UK and US:
On Monday, the economic calendar for the UK and the US is completely empty. Therefore, the market is likely to be calm amid the lack of news.
COT report (Commitments of traders):
The latest COT report published on March 23 for the British currency showed moderate changes in the mood of large investors. Non-commercial traders again got rid of long-contracts, closing 3,249 positions and opened 4,405 short-contracts. Thus, the bias has again become more bearish. However, this shift occurred mainly due to the decline in the number of long-contracts.In general, in recent months, the total number of short – contracts managed by speculators has not changed, totaling 30,000-40,000. Hence, the pound sterling may continue to fall and the trend line on the 4-hour chart may help determine the moment when the downward movement ends.
Forecast and recommendations:
Earlier, it was recommended to open long trades on the pound sterling if it consolidated above the descending channel on the 1H chart with the targets of 1.3820 and 1.3900. However, it failed to reach the first goal just a little bit. It is recommended to sell the pound sterling at the rebound from the level of 1.3850 and the trend line on the 4-hour chart with a target of 1.3701.
TERMS:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private and large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency not for speculative profit, but to support current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
