GBP/USD – H1.
Hi everyone! On the hourly chart, the pound/dollar pair closed below the sideways channel, indicating that the quotes had every chance to continue moving downwards. However, the pair's bearish run was limited. The British currency stopped at about the 61.8% Fibonacci level, that is, 1.3820. Thus, I can say that the pound sterling is much better at resisting the onslaught of bears than the euro. The European currency continues to lose in value even when today's macroeconomic calendar is bereft of any important releases, while the pound sterling is standing still. In addition to economic statistics from the United States released on Friday, another significant factor provided support to the US dollar in recent weeks was a spike in US Treasury yields. In fact, 10-year Treasuries have been growing for a long time, but only in recent weeks they have climbed above the current inflation rate in the United States. Moreover, the yield continues to grow.
Today, the yield on 10-year Treasury bonds has already reached 1.598%. However, why does the British currency show a much more modest decline than the euro? This suggests that there are certain factors that put pressure on the euro but do not affect the British pound. Or, on the contrary, there are some factors that support the pound sterling but have no effect on the euro. Notably, the pound sterling continued its rally until recently, while the euro has been suffering losses for quite some time. Thus, the two major European currencies are moving differently. Besides, it became known that the US Senate had passed a new relief bill that would provide support to the American economy. However, given the lack of significant changes in the dynamics of both pairs, EUR/USD and GBP/USD, I cannot say that this news is of interest to traders.
GBP/USD – H4.
On the 4-hour chart, the pound/dollar pair fell to the uptrend line. The pair did not rebound from it but it failed to close below the trend line either. According to the MACD indicator, a bullish divergence was formed, which points to the likelihood of an upward reversal and the pound's renewed rally. If the price closes below the trend line, investor sentiment is likely to become bearish.
GBP/USD – Daily.
On the daily chart, the quotes continue to lose ground in the direction of their upward trend line. In the long term, traders' sentiment is likely to remain bullish.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair closed above the second downtrend line. Thus, the pound sterling has a better chance of continuing its bullish movement in the long term.
News overview:
Friday's macroeconomic calendar was bereft of important releases from the UK. There was no significant intraday movement, even despite strong statistics from the United States.
Economic calendar for the US and UK:
Today, there are no major economic releases from the UK or US. Unlike the euro, the British currency is clearly working out the lack of news on Monday.
Commitment of Traders (COT) report:
The latest COT report published on March 2 turned out to be quite interesting for the pound sterling. When compared to the euro report, it can be seen that investor sentiment for the reporting week has changed dramatically. The mood of the euro traders has become more bearish, while the mood of the pound speculators has become more bullish. This is a very significant difference. Perhaps this is the reason why the euro has been falling for two months, while the pound sterling has been losing in value for only two weeks. The number of traders in the non-commercial category decreased by 11 thousand. However, the number of long positions declined by 2.6 thousand, and short positions fell by 8.2 thousand. Thus, major traders still rely on growth in the British pound.
Outlook for GBP/USD and trading recommendations:
Long positions can be opened in case the price rebounds from the trend line on the 4-hour chart with a view to reaching the target levels of 1.3900 and 1.3980. Short positions can be opened if the price closes below the trendline on the 4-hour chart with a view to reaching the target levels of 1.3721 and 1.3625.
TERMS:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy the currency not to obtain a speculative profit but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price dynamics.
