11.03.202009:23 Forex Analysis & Reviews: Hot forecast for GBP/USD on 03/11/2020 and trading recommendation

The pullback was inevitable, if only for the simple reason that the pound was growing quite strongly for five consecutive days, and for no apparent reason. However, the rate at which the pound was losing its ground yesterday causes slight confusion. There is no single reason for such a rapid collapse of the pound. This is a combination of several factors at once. First, the pound was heavily overbought, but this is never a sufficient reason. Secondly, US stock indices began to move away from the shock caused by a sharp collapse in oil prices. Thirdly, the increasing panic due to the coronavirus hit the UK hard, especially amid reports that the United Kingdom's deputy secretary of health was among the infected. Well, against the background of all this, the notorious overbought pound became only an amplifying factor.

The scale of the decline was so impressive that the pound itself was locally oversold, and there are signs, so to speak, of the rebound after the rebound. Nevertheless, this obviously will not last long, since today, extremely important macroeconomic data will be published in the UK. In particular, the fourth quarter GDP totals will almost certainly show that economic growth slowed from 1.2% to 0.8%, which clearly does not add optimism, as the risks of a slide into recession are increasing. In addition, the growth rate of industrial production, or rather decline, may accelerate from -1.8% to -2.7%. Equally important, the trade deficit should reach -3.7 billion pounds. But in the previous month, the trade surplus amounted to 7.7 billion pounds. Therefore, the forecasts are clearly not impressive, and they will most likely be confirmed. And against this background, the pound will clearly continue its decline.

GDP growth rate (UK):

However, the pound will make a new attempt to grow in just a couple of hours. The reason will be inflation data in the United States, where it should decline from 2.5% to 2.3%. If we add to this the rumors that the Federal Reserve System may lower the refinancing rate once again, then the slowdown in inflation will be perceived as a clear confirmation of such thoughts. Well, such fears themselves will have a clear negative impact on the dollar.

Inflation (United States):

In terms of technical analysis, we see an impulse downward move, where the quote for the day flew more than 200 points, returning us to the area of 1.2900. In fact, we have regular speculations against the background of an earlier warm- up, where the quote locally demonstrated a correction of more than 50%.

Considering the trading chart in general terms, we see that the stop of the past day coincided with a slowdown on February 10 and 20, where the quote systematically found a foothold for the subsequent regrouping of trading forces.

It is likely to assume that the speculative mood will continue in the market, where the main pivot point is in the region of the level of 1.2770. It is worth considering that when publishing data on inflation, we can see a reverse move, focusing the quote on the main borders of the 1.2770 / 1.3000 range.

Concretizing all of the above into trading signals:

- Long positions are considered depending on the deceleration point: the first option is calculated based on the fact that the existing impulse has already played a downward move, and the price goes into the deceleration stage, where the entry point is higher than 1.2950;

- The second option is considering a further decline, where there is a slowdown in the region of 1.2770 / 1.2800, relative to which the work is being done to buy.

- Short positions are looking towards 1.2800.

From the point of view of a comprehensive indicator analysis, we see that the indicators of technical instruments have changed due to the recent impulse move, where the minute and hour periods are concentrated on the sale, and the daily sections have taken a neutral position.