05.03.202611:30 Analisis Forex & Kajian: GBP/USD. March 5th. The market will remain under the influence of geopolitics until Friday

The wave situation remains bearish. The last completed upward wave failed to break the previous peak, while the new downward wave broke the previous low. To shift the trend to bullish, the pair would need to consolidate above the last peak at 1.3573, or form two consecutive bullish waves, which is unlikely in the near term. The information background for the pound has been weak in recent months, and geopolitics is giving bears a full advantage in the market.

The news background on Wednesday had only a limited effect on traders' sentiment. Bullish traders were unable to significantly improve their position. Today the news flow will be virtually absent, so the market's attention may once again shift to Iran. There is a large amount of news coming out of Iran, all related to military actions. Yesterday Israel and the United States carried out another joint missile strike on Tehran, and in response Tehran began striking not only oil refineries, LNG facilities, and military bases in the region, but also data centers. Gas production in Qatar has completely stopped. Gas and oil prices continue to rise. Uncertainty about the duration of the conflict does not encourage traders to deal with risky assets and currencies. Therefore, any rise of the pound currently appears limited.

On Friday, traders may briefly shift their focus to the US labor market and unemployment data. However, under current conditions these reports are unlikely to change market sentiment from bearish to bullish even if they disappoint. If they show positive results, bears will receive another reason to attack.

On the 4-hour chart, the pair rebounded from the upper boundary of the downward trend channel, reversed in favor of the US currency, and closed below the support level of 1.3369–1.3435. Thus, the downward movement may now continue toward 1.3118–1.3140. A close above the downward channel would allow expectations for the end of the bearish trend. No developing divergences are currently observed on any indicators.

Commitments of Traders (COT) report:

The sentiment of the non-commercial category of traders became more bearish during the latest reporting week, which under current circumstances no longer looks accidental. The number of long positions held by speculators decreased by 14,802, while the number of short positions decreased by 134. The gap between longs and shorts is now roughly 67,000 vs 124,000.

In recent months, bears have more often dominated, but the situation with contracts on the euro currency is the opposite. I still do not believe in a long-term bearish trend for the pound, but now everything will depend not on economic indicators or Trump's trade policy, but on the duration and scale of the war in the Middle East.

Over the past year the pound looked like a safer currency compared to the dollar—more stable and with a clearer economic outlook. However, in recent months a correction began while the bullish trend remained, and then the conflict in the Middle East started escalating almost daily. Negotiations on an agreement between the US and Iran failed, so now the dollar is strengthening due to geopolitics. How long the dollar will continue to rise depends on developments in the Middle East.

News calendar for the US and the UK:

• US – Initial Jobless Claims (13:30 UTC).

On March 5 the economic calendar contains only one minor entry. The information background may have little influence on market sentiment on Thursday, although bullish traders are not taking advantage of this so far.

GBP/USD forecast and trading tips:

Selling the pair is possible today if the hourly chart shows a rebound from the 1.3341–1.3352 level, with a target of 1.3199–1.3214.

Buying can be considered if the pair closes on the hourly chart above 1.3341–1.3352, with a target of 1.3437–1.3465.

Fibonacci levels are built from 1.3341–1.3866 on the hourly chart and from 1.3431–1.2104 on the 4-hour chart.