According to the hourly chart, the GBP/USD pair kept increasing on Thursday, and by the end of the day, it had secured above both the upper line of the side corridor, which is no longer functional, and the Fibonacci level of 127.2%, which is 1.2112. It is important to note that a rebound from the level of 1.2112, which did almost nothing to support the bears, took place during the day. Since the British pound generally follows the euro in everything, the background of European information was crucial for the pound. Therefore, the lines and levels on the charts are no longer important for bulls and bears because they can no longer pull the rope in their favor.
Everything I had to say regarding yesterday’s ECB meeting is been said. After the euro, the British pound increased. Although it appeared that European inflation had nothing to do with the British pound, today’s release of an inflation report in the European Union caused the euro and the pound to fall slightly. Nonetheless, sometimes the pound tends to follow the euro. 8.5% inflation in the European Union in February represents a very slight decline. The ECB and the euro currency now have new opportunities as it is clear that the rate needs to be raised even further in light of this report. Core inflation has risen once more and is currently at 5.6%. We can say that the ECB has not advanced yet since it prioritizes the base indicator more. And if the DCP tightening pace slows down in May (by up to 0.25%), this could have a very detrimental effect on the euro. As a result, the British pound fell as well. The European regulator will lose this battle if it begins to restrict assertiveness while core inflation continues to rise.
The Fed and Bank of England will also meet next week, and the outcomes of those meetings will have a significant impact on the market. It is also not particularly favorable for the pound because the Bank of England can only raise the rate by 0.25%.
After rebounding from the level of 1.2008, the pair displayed a new reversal in favor of the British pound on the 4-hour chart. Thus, the growth process may continue in the direction of the corrective level of 127.2% (1.2250). The US dollar will benefit from the quotes’ recovery from 1.2250 and a new decline in the direction of 1.2008. Recently, horizontal movement in one form or another has been seen very often on several charts.
Report on Commitments of Traders (COT):
Over the past reporting week, traders in the “Non-commercial” category have become more pessimistic than they were the previous week. The CFTC still does not give new reports, thus we are currently discussing information from a month ago. Speculators now hold 3,277 more long contracts than short contracts, a difference of 4,898 units. The major players’ overall outlook is still “bearish,” and there are still a lot more short-term contracts than long-term contracts. The situation has shifted in favor of the British pound during the last several months, although the gap between the number of long and short positions held by speculators still exists. Moreover, “now” refers to mid-February. As a result, the pound’s chances are still dismal, but the British pound is not eager to lose ground. There was an exit outside the downward corridor on the 4-hour chart, and the pound is currently supported. I do observe that many current forces, including the traders themselves, conflict with one another.
The following is the UK and US news calendar:
US – industrial production (13:15 UTC).
US – consumer sentiment index from the University of Michigan (14:00 UTC).
There are no economic events scheduled for Friday in the UK and only two reports of minor significance are scheduled for the US. The background information’s impact on today’s traders’ attitudes will be minimal.
Forecast for GBP/USD and trading advice:
With targets of 1.2007 and 1.1928, further sales of the British pound are probable if it is anchored below the level of 1.2112 on the hourly chart. With targets of 1.2112 and 1.2007, you can sell as well if the price is rebounding from 1.2250. On the hourly chart, buying the pair was possible when it recovered from the 1.2007 level with a target of 1.2112. This goal has been completed.