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GBP/USD – 1H.
Good afternoon, dear traders! Yesterday, on the one-hour chart, the pound/dollar pair advanced to the 38.2% correctional level located at 1.3980. The price failed to close above this level. Thus, we can see a sideways channel. The pair has tested the upper limit of this range three times already. Yesterday, Jerome Powell's speech affected the British pound. Its price also dropped. However, unlike the euro, the British pound remained within the sideways channel. Thus, a rebound from the lower limit of the range may push the pound sterling to the upper limit. If the price closes below the range, it is likely to go on falling towards 1.3820 and 1.3721.
Yesterday, a news flow from the UK was rather scarce.The construction PMI data was the only positive report. The indicator rose to 53.3 points from the level below the 50-point threshold. The data encouraged bulls and from the first half of the day until evening, they were buying the pound sterling. This, in turn, aroused hope for the resumption of the uptrend. However, Jerome Powell's speech changed the market sentiment and the pound sterling dropped again. Curiously, the provided speech could hardly be called positive for the US dollar. The Fed's governor said that the regulator was not planning to cap the rise of the US bonds. That is why their yield may continue advancing, though the demand remains low. Moreover, investors are still concerned about high inflation. I suppose that during this week, traders have been shocked. However, the British pound proved that higher prices on US bonds is not the reason for the greenback's appreciation. The currency showed only a local jump, whereas in fact, it is still trading sideways. Notably, yields on government bonds are increasing in both the UK and the EU.
GBP/USD – 4H.
On the four-hour chart, the pound/dollar pair declined from the 161.8% Fibonacci level located at 1.3979 to settle at 1.3850. However, a bullish divergence near the CCI indicator provides traders with the possibility of a climb towards the 161.8% correctional level of 1.3979. The market sentiment remains bullish thanks to the rising trend line.
GBP/USD – Daily.
On the daily chart, the pair closed above the 121.2% Fibonacci level located at 1.4084. That is why the price may slide. However, data from the four-hour chart is the most important now.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair closed above the second falling trend line. Thus, the likelihood of the British pound's appreciation is increasing.
News overview:
On Thursday, the UK and the US disclosed only a few important reports. That is why all eyes were turned to Jerome Powell's speech.
Macroeconomic calendar for the US and the UK:
US – Unemployment Rate (13-30 GMT).
US – Non-Farm Employment Change (13-30 GMT).
US – Average Hourly Earnings (13-30 GMT).
US – Treasury Secretary Janet Yellen Speaks (14-00 GMT).
Today, Janet Yellen will also provide an important speech. Traders will search for hints about future government's actions concerning soaring yields of government bonds. At the same time, reports on the US non-farm employment change and unemployment rate are also very important.
Commitments of traders report:
The latest COT report on the British pound published on February 23 was really interesting. During the last week, speculators opened 7,243 long contracts and closed almost 2,000 short contracts. Thus, their mood sharply changed to the bullish one. This corresponds with the market situation. In the following days (which are not included in the report), the pound sterling began falling. Thus, the next report will also attract interest. At the moment, the overall market condition supports the pound sterling as non-commercial traders go on opening long contracts.
Outlook for GBP/USD and recommendations for traders:
It is better to buy the British pound, if on the one-hour chart, it rebounds from the lower limit of the range towards the level of 1.3980. It is possible to open sell positions, if the pair closes below the sideways channel on the one-hour chart with the target at 1.3820 and 1.3721.
Terminology
"Non-commercial" traders are major market players such as banks, hedge funds, investment funds, private, and large investors.
"Commercial" traders are 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" are small traders who do not have a significant impact on the price.
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