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On the hourly chart, the GBP/USD pair on Wednesday reversed in the resistance level of 1.3341–1.3352 in favor of the US dollar and began a new downward movement toward the support level of 1.3199–1.3214. A rebound from this zone would allow expectations of a reversal in favor of the pound and some growth toward 1.3341–1.3352. A consolidation below the 1.3199–1.3214 level would increase the likelihood of further decline toward the 1.3139 level.
The wave situation remains "bearish." The last completed downward wave broke the previous low, while the last upward wave failed to break the previous peak. The news background for the pound has been weak in recent months, while geopolitics has given bears a clear advantage in the market. The war in Iran remains the main reason for the strengthening of the US currency, and bullish traders still do not see clear timeframes for the end of the conflict. Therefore, they are not rushing to go on the offensive.
The news background on Wednesday supported bearish traders, allowing them to launch a new offensive. First, the US Producer Price Index signaled a very likely acceleration of inflation in the near future; then the Federal Reserve confirmed that inflation may rise in the coming months, so the scenario of a rate cut is canceled. Jerome Powell also noted weak US economic growth in the fourth quarter and very weak data on unemployment and the labor market in February. However, while last autumn the FOMC was ready to support troubled areas of the economy, it has now decided to focus entirely on inflation.
In a few hours, the results of the Bank of England meeting will be announced, and official forecasts have also shifted in a "hawkish" direction. If just two weeks ago traders were confident about monetary easing, then with the start of the war in the Middle East they are now convinced of the opposite. Thus, today bulls may already attack—if geopolitical developments allow them to do so. In the morning, Iran struck one of Saudi Arabia's largest oil refineries, SAMREF, which had been the only functioning oil hub in the Middle East in recent weeks. Oil prices immediately resumed their rise. Along with them, the US dollar may also resume growth.
On the 4-hour chart, the pair returned to the upper boundary of the descending trend channel and rebounded from it. Thus, the downward movement resumed toward the 38.2% retracement level at 1.3145. Only a close above the descending channel would allow traders to expect the end of the bearish trend and growth toward the Fibonacci level of 0.0% at 1.3786. No emerging divergences are observed on any indicator today.
Commitments of Traders (COT) report:
The sentiment of the "Non-commercial" category of traders became more bearish over the last reporting week, which no longer looks accidental under current conditions. The number of long positions held by speculators decreased by 10,229, while short positions increased by 1,282. The gap between long and short positions is now essentially: 49,000 versus 133,000. In recent months, bears have dominated more often, although the situation with euro contracts is directly opposite. I still do not believe in a sustained 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 maintaining a bullish trend, and then the conflict in the Middle East started escalating almost daily. Geopolitics remains the only reason for the growth of the US currency.
News calendar for the US and the UK:
On March 19, the economic calendar contains seven entries, and all UK data are considered important. The impact of the news background on market sentiment on Thursday may again be strong throughout the day.
GBP/USD forecast and trading advice:
Selling the pair is possible today if it consolidates below the 1.3199–1.3214 level on the hourly chart, with a target of 1.3139. Buying is possible today if it closes above the 1.3341–1.3352 level, with targets at 1.3437–1.3465, or on a rebound from the 1.3199–1.3214 level.
Fibonacci levels are constructed from 1.3341–1.3866 on the hourly chart and from 1.2104–1.3786 on the 4-hour chart.
*Analiza tržišta koja se ovde nalazi namenjena je boljem razumevanju tržišta i ne pruža instrukcije za vršenje trgovanja.
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