23.03.2023 05:16 PM

On Wednesday and Thursday, the GBP/USD pair continued to increase, and today it was trading near the level of 1.2342, according to the hourly chart. The US dollar's rebound from this level and the start of a decline in the direction of the lower line of the ascending trend corridor characterize the traders' attitude as "bullish." Fixing quotes below the channel greatly increases the likelihood that the pair will continue to decline toward levels of 1.2112 and 1.2007.

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The second significant event for the pair this week was the Fed meeting. Let me remind you that the UK released an inflation report yesterday, which the Bank of England will use to determine its monetary policy today. Despite rising inflation, traders' expectations have stayed constant. Although, in my opinion, the inflation issue is only growing worse and the market is still anticipating an increase of 0.25 percent. It should have shown a decline of at least 4% after 10 interest rate rises, but it decreased by only 1%. Therefore, the Bank of England should consider continuing the rate hike's present pace rather than slowing it down. Two committee members undoubtedly voted against any tightening at the last three meetings, though. At the conference today, there may already be three of them. I think that the Bank of England will not raise the rate for a very long time since it no longer considers inflation stability to be its primary concern.

He made an effort to keep prices stable, but it was ineffective. The British regulator does not want to destroy the economy. It is not necessary to anticipate a significant tightening in 2023 in this situation. Although the British pound is still rising, I believe it will soon begin to decline alongside the euro.

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The pair increased to and even anchored above the corrective level of 127.2% (1.2250) on the 4-hour chart. It is possible to continue the growing process in the direction of the level of 1.2441. The MACD indicator's developing "bearish" divergence once more anticipate an oncoming reversal in favor of the US dollar and a slight decline in the quotes for the pound.

Report on Commitments of Traders (COT):

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Since the previous reporting week, the sentiment among traders in the "Non-commercial" sector has grown less "bearish" than it was two weeks ago. The CFTC still does not supply "new" results, thus we are currently discussing reports from two weeks ago. Speculators now hold 7,549 more long contracts than short contracts, a difference of 1,227 units. The major players' overall outlook is still "bearish," and there are still more short-term contracts than long-term contracts. The situation has been steadily shifting in favor of the British pound over the past few months, although the gap between the number of long and short positions held by speculators still exists. And "now" is the beginning of March. As a result, the pound's prospects continue to improve, but the British pound has not been rising or declining in recent months. There was an exit outside the declining corridor on the 4-hour chart, and the pound is currently supported. I do observe that several current factors are at odds with one another, and traders themselves do not have an opinion on the pair.

The following is the UK and US news calendar:

UK – interest rate decision (12:00 UTC).

UK – minutes of the monetary policy committee meeting (12:00 UTC).

US – number of construction permits issued (12:00 UTC).

US – number of initial applications for unemployment benefits (12:30 UTC).

There are multiple entries for Thursday in both the UK and US calendars of economic events, but only in Britain are they significant. The information background may once again have a significant impact on the traders' attitudes today.

Forecast for GBP/USD and trading advice:

When the British pound recovered from the level of 1.2342 with a target of 1.2238, sales of the currency were possible. We stay in sales with a target of 1.2112 when closing at 1.2238. When the pair rose over the 1.2007 mark, buyers could buy it with targets at 1.2112, 1.2238, 1.2250, and 1.2342. All targets have been met. I still think new purchases are impractical.

Samir Klishi,
Analytical expert of InstaForex
© 2007-2023
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