At the auction last week, the British pound, like other major currencies, declined against the US dollar. The losses of the GBP/USD pair amounted to 0.64%. The demand for the US currency was still caused by expectations and speculation that the US Federal Reserve System (FRS) will begin to reduce asset purchases at the end of this year. Hotbeds of an outbreak of an increase in the number of COVID-19 infections and fears that the Chinese economy may be affected by restrictive measures caused by COVID-19 also increased the demand for the US currency as a safe asset. This week, the main events for the GBP/USD currency pair will be the meetings of the Central Banks of the two countries. Investors' attention will be especially focused on the extended Fed meeting, including a press conference by Federal Reserve Chairman Jerome Powell. Market participants will expect more specific signals from the US regulator on curtailing the quantitative easing program. We will talk in more detail about these and other events directly on the day of their release and after the decisions of the Federal Reserve and the Bank of England. In the meantime, we are moving on to the technical picture for the pound/dollar pair. Moreover, considering the Friday closing of weekly trading, we will start with the corresponding timeframe.
Weekly
As noted at the beginning of the article, at the auction on September 13-17, the GBP/USD currency pair declined and closed the week under the red line of the Tenkan Ichimoku indicator. It does not add to optimism and is a bearish signal. It is hoped that the price will be well supported by the 50 simple moving average and the lower border of the Ichimoku indicator cloud. However, today's trading on GBP/USD started with very aggressive sales. However, taking into account the main events mentioned above, a lot of things in the price movement of the quote can change, and even more than once. In the meantime, we will outline the possible goals and options for developing the current five-day trading. If the bearish scenario continues, the pair risks falling to the support level of 1.3570 and once again testing the strength of this mark. But even if this level holds, the week's closing within the Ichimoku cloud will be perceived negatively and indicates a further decline in GBP/USD. For the pound bulls to correct the situation, they need to close weekly trading above the Tenkan red line, which runs at 1.3791 and above one of the key levels of 1.3800. The task is not easy, but given the important events (the meetings of the Fed and the Bank of England), it is quite feasible.
Daily
The daily chart shows especially clearly how aggressive the pound/dollar pair was subjected to at the time of writing. Right here and now, the quote is already trading below the support level of 1.3725 and the orange 200 exponential moving average, which should have strengthened this level. However, there is still enough time before the end of today's trading to correct the situation. If the pound bulls manage to do this, we will see a candle with a long lower shadow and a closing price above 1.3725. If the bears do not miss their current advantage and confidently close the session at 1.3725 and 1.3700, most likely, we will see a continuation of the downward dynamics, the targets of which will be 1.3620, 1.3600, and 1.3570. In the case of a true breakdown of the last level, the selling pressure will continue and become even stronger. However, given the not uncommon change in market sentiment, I suggest waiting for the end of today's trading. In tomorrow's article, where smaller time intervals will be considered, we will try to find specific points for entering the market.
