The GBP/USD currency pair demonstrated only one thing on Friday—complete unwillingness to move. The market seemed to have fallen asleep and missed the Non-Farm Payroll and unemployment reports. Although we warned that the reaction might be absent, we didn't fully believe it. For one reason or another, both crucial reports were ignored. Thus, on Friday, traders once again confirmed that the market is not inclined to react to fundamental or macroeconomic events at present.
In the upcoming week, no significant events are scheduled in the UK. Several important reports will be released in the US, but what are the chances that the market will even notice them? All attention is currently focused on Trump's threats to deliver the promised strike against Iran within the next 48 hours. Recall that the US President gave Iran 10 days to sign an agreement with Washington (as if this is a one-sided action) and to unblock the Strait of Hormuz (which "is not a problem for the US"). As of now, none of Trump's conditions have been met, and high-ranking Iranian officials have responded to Washington: a truce and cessation of hostilities are possible, but only on terms set by Iran. Iran is seeking security and guarantees.
Who can provide these security guarantees if Trump bombards Iran every six months? It's a rhetorical question. At present, we see no signs that this conflict can be paused, even momentarily. For formality's sake, let's consider the macroeconomic background in the US. On Monday, an important ISM Services Index will be released. This indicator has recently shown positive values. On Tuesday, the durable goods orders report will be published. On Wednesday, the Fed minutes and the fourth-quarter GDP figure will be released. On Friday, the March inflation report and the University of Michigan consumer sentiment index will be released.
The most important and interesting report will certainly be the inflation report. The market ignored labor and unemployment data, perhaps because the Fed has defined the trajectory of its future monetary policy. This will depend entirely on inflation. Currently, US inflation is expected to spike to 3.4%. Earlier, Jerome Powell said no tightening of monetary policy was planned; however, in our view, everything will depend on inflation growth rates in the coming months. We fully acknowledge that the Fed may consider one or two rate increases. In any case, the higher the inflation, the better the dollar will perform. The dollar has been doing quite well even without inflation in recent months.
Thus, despite the continuation of a global upward trend on the daily timeframe, we believe that further growth of the dollar is more likely under current circumstances.
The average volatility of the GBP/USD pair over the last 5 trading days is 107 pips, which is considered "average." On Monday, April 6, we expect the pair to trade within a range between 1.3091 and 1.3305. The upper linear regression channel has turned downward, indicating a change in trend. The CCI indicator has entered the oversold area twice and has also formed a "bullish" divergence, which again warns of the completion of the downward trend. However, geopolitics is currently more important than technical signals.
Nearest Support Levels:S1 – 1.3184S2 – 1.3123S3 – 1.3062Nearest Resistance Levels:R1 – 1.3245R2 – 1.3306R3 – 1.3367Trading Recommendations:The GBP/USD currency pair has been moving downward for a month and a half, but its long-term prospects have not changed. Trump's policies will continue to exert pressure on the US economy; therefore, we do not expect the US currency to grow in 2026. Thus, long positions with a target of 1.3916 and above remain relevant when the price is above the moving average. When the price is below the moving average line, short positions can be considered with targets of 1.3123 and 1.3091 based on geopolitical factors. In recent months, almost all news and events have turned against the British pound, contributing to the prolonged bearish trend. Geopolitics remains the key factor.
Explanations For Illustrations:Linear regression channels help identify the current trend. If both are directed in the same direction, the trend is strong.The moving average line (settings 20.0, smoothed) determines the short-term trend and the direction in which trading should currently be conducted.Murray levels are target levels for movements and corrections.Volatility levels (red lines) represent the probable price channel in which the pair will remain over the next day based on current volatility indicators.CCI Indicator: Its entry into the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal in the opposite direction is approaching.