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On the hourly chart, the GBP/USD pair on Thursday consolidated below the 1.3341–1.3355 level, allowing traders to expect a continuation of the decline toward the support level of 1.3199–1.3214. A consolidation above the 1.3341–1.3355 level would favor the pound and some growth toward the resistance level of 1.3437–1.3465.
The wave situation continues to shift toward a "bullish" structure, but very slowly. The last completed upward wave exceeded the previous peak by only a few points, while the new downward wave has not yet broken the previous low. The news background remains weak for the pound, while geopolitics gives bears an almost complete advantage in the market. The war in Iran remains the main reason for the strengthening of the US dollar in recent months. This week, the geopolitical backdrop has begun to change, but this may only be an illusion of de-escalation.
On Thursday, the news background supported neither bulls nor bears, as there were very few economic releases. This morning, the UK published its February retail sales report, which also did not allow for clear conclusions. Sales volumes fell by 0.4% month-on-month and increased by 2.5% year-on-year. The monthly figure is negative but better than traders' expectations. The annual figure exceeded forecasts. Thus, the report can be considered somewhat more positive than expected; however, bears resumed their attack from early morning. In my opinion, geopolitics remains the key factor for traders, while all others are secondary. In recent weeks, we have repeatedly seen situations where chart patterns and news factors have had no influence on traders' sentiment. Yesterday, Donald Trump announced a 10-day reprieve for Iran's energy facilities, yet the US dollar is still rising on Friday morning. It seems traders do not believe in negotiations or a resolution to the conflict in the Middle East.
On the 4-hour chart, the pair consolidated above the downward trend channel, which gave bulls absolutely nothing. A rebound from the 50.0% Fibonacci level at 1.3439 again favored the US dollar, and consolidation below the 1.3340–1.3369 level allows for expectations of a continued decline toward the 76.4% corrective level at 1.3215. No emerging divergences are observed in any indicators today.
Commitments of Traders (COT) report:
The sentiment of the "Non-commercial" category of traders became less bearish over the last reporting week, although overall bears still fully control the initiative. The number of long positions held by speculators decreased by 4,977, while short positions decreased by 23,659. The gap between long and short positions now stands at approximately 44,000 versus 110,000. In recent weeks, bears have dominated, which raises no questions given the geopolitical situation. I still do not believe in a bearish trend for the pound, but now everything will depend not on economic indicators, Trump's trade policy, or central banks' monetary policy, but on the duration, scale, and consequences of the war in the Middle East.
Over the past year, the pound has appeared to be a safer currency compared to the dollar—more stable and with a clearer economic outlook. However, in recent months, a correction began while maintaining a bullish trend, and then the conflict in the Middle East started escalating almost daily. Geopolitics remains the only reason for the strengthening of the US dollar.
News calendar for the US and the UK:
On March 27, the economic calendar contains only two relatively minor entries. The impact of the news background on market sentiment on Friday is expected to be weak or absent.
GBP/USD forecast and trading advice:
Selling the pair was possible after a rebound on the hourly chart from the 1.3437–1.3465 level with a target of 1.3341–1.3352. This target has been reached. New sell positions may be considered after a close below the 1.3341–1.3352 level with a target of 1.3199–1.3214. Buy positions may become possible today after a close above the 1.3341–1.3352 level with targets of 1.3437–1.3465 and 1.3526–1.3539.
Fibonacci levels are drawn from 1.3341–1.3866 on the hourly chart and from 1.3012–1.3868 on the 4-hour chart.
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