Good day!
On February 17-21, the pound/dollar pair lost 0.64%. In principle, nothing is surprising in such price dynamics since the British currency continues to be dominated by the issue of a trade agreement between the UK and the European Union. This is why it is necessary to solve all the acute issues and conclude a full-fledged trade agreement.
Some European politicians believe that it will not be possible to agree on trade rules this year due to numerous contradictions and pitfalls. In particular, fishing in UK waters. The British want to fish in their own waters, but a number of EU countries want to continue fishing in the UK. This is not the only contradiction. Thus, we need a separate article about it.
In today's article, we will highlight the most significant macroeconomic reports and analyze the technical picture that is observed for the GBP/USD pair.
No important or significant reports are expected from the UK this week. From American statistics, you should pay attention to the index of economic activity from the Federal Bank of Chicago, an indicator of consumer confidence, initial applications for unemployment benefits, orders for durable goods, GDP, as well as data on personal income and expenses.
Weekly
As for the technical picture, as already noted at the auction of the last five days, the pair declined but the auction closed above the 89 exponential moving average. So far, it is not possible to break through 89 EMA. Although the pair fell to 1.2848 in the previous trades, it was able to return higher and end the session on February 17-21 at 1.2952.
This week, the pound/dollar started with a decline, which is still more or less moderate. At the moment, the main goal for downside players is past lows at 1.2848. If this level is broken, the next targets will be the 50 simple moving average at 1.2767 and the Kijun line of the Ichimoku indicator at 1.2735. In general, the key level of support in the current situation could be considered a significant mark of 1.2800. However, there are several strong technical levels in the area of 1.2780-1.2730, from which there may be a rebound up and a return above 1.2800.
If we consider an alternative upward scenario, in case of growth, a strong price zone of 1.3000-1.3050, where the psychological level and the maximum values of the last week may become a serious obstacle. However, in my opinion, the bullish sentiment for GBP/USD will only strengthen after the true breakdown of the Tenkan line, which is currently at 1.3065. On the weekly chart, you can clearly see how much resistance Tenkan has to the attempts of the quote to break up. These are the nearest benchmarks on this timeframe, where the descending scenario is seen as a slightly higher priority.
Daily
On the daily chart, as previously expected, the pair found strong support in the price zone of 1.2780-1.2750, after which it began to recover and showed good growth on Friday. Although this is not due to the pound but to the weakness of the US dollar, which declined across a wide range of markets on February 21.
The Tenkan line of the Ichimoku indicator, together with the 89 exponents, does not let the pair go up, providing quite strong resistance. But even if it is possible to rise above Tenkan, it will be necessary to break through Kijun and 50 MA, which are at 1.3027 and 1.3043, respectively. But that's not all. Above 1.3068, there is a strong resistance level of sellers. I believe that only a breakdown of this mark with consolidation above will indicate a further tendency of the "British" to grow.
H4
As you can see, trading on the pound also opened with a bearish gap, after which the pair tried to close it. However, it was not possible to rise above 1.2953 and the rate turned to decline. At the end of the review, the pound/dollar is under selling pressure and is trading near the important level of 1.2900.
In my opinion, it's too late to sell now. But if a bullish model (or models) of Japanese candlesticks appear in the area of 1.2875-1.2850, you can try to buy with the nearest goal in the area of 1.2945-1.2965. At the moment, there are no other trading offers for the pound. In a day or two, we will return to this interesting currency pair and once again look for options for entering the market.
Good luck!
