GBP/USD – 1H.
Good afternoon, dear colleagues! On the one-hour chart, the pound/dollar pair continued falling after a rebound from the level of 1.4190. The pair closed below the upward trend channel. As a result, market sentiment became bearish. If the price fixes below 1.3976, it is likely to continue sliding towards the levels of 1.3895 and 1.3820. The yesterday's situation was described in the article devoted to the euro/dollar pair.
In brief, the US positive statistical data triggered a surge in the US dollar. Notably, the greenback began rising against the pound sterling two days ago. Yesterday, bulls were putting pressure on the US dollar, thus boosting the quote towards the 261.8% correctional level of 1.4333. However, later, bulls began closing their buy positions. Importantly, the British pound was gaining in value for a long time without strong reasons.
Most analysts have also noticed this fact. It seems that during the last week of the month, the pound sterling started moving reflecting the news flow. After the recent speeches, provided by Jerome Powell and Andrew Bailey, economists could not conclude that the monetary policy of both central banks would become tighter. Both governors were extremely cautious making comments and did not make any hawkish announcements. At the same time, the pound sterling continued rising. Today or tomorrow, market sentiment may significantly change as the US House of Representatives will vote on the $1.9 trillion aid package. It is a really important event, and traders will hardly ignore it.
GBP/USD – 4H.
On the four-hour chart, the pound/dollar pair reversed and dropped to the 161.8% correctional level of 1.3979. If the pair closes below this level, it may decline to 1.3850. If the pair continues losing in value at the current paces, it will reach the mentioned level as early as later today. At the same time, the market sentiment remains bullish.
GBP/USD – Daily.
On the daily chart, the pound/dollar pair closed below the 127.2% Fibonacci level located at 1.4084. That is why the price may decline even lower. However, data from the four-hour chart is more important.
GBP/USD – Weekly.
On the weekly chart, we can see that the pair closed above the second downward trend line. Thus, the likelihood of a long-lived growth in the pound sterling is increasing.
On Thursday, the UK economic calendar was completely empty. At the same time, the US statistical data led to a surge in the US dollar.
Macroeconomic calendar for the US and the UK:
US – Core PCE Price Index (13-30 GMT).
US – Personal spending and income (13-30 GMT).
On February 26, 2021, the UK is not expected to unveil any important report. All eyes will be turned to the US again. However, today's reports may be significantly weaker than yesterday's ones.
Commitments of traders report:
The latest COT report on the British pound and the euro was really boring. In the given period, non-commercial traders opened 369 long positions and closed 3,308 short positions. Thus, speculators' sentiment became more bullish, pushing the pound sterling higher. In general, all market players opened almost the equal number of long and short positions. Despite some changes, the British pound continues growing.
Outlook for GBP/USD and recommendations for traders:
It was recommended to buy the British pound, if it closed above the level of 1.4190 on the one-hour chart. However, these predictions did not come true. At the same time, it was recommended to open sell positions after the price fixation below the uptrend channel on the one-hour chart with the targets of 1.3895 and 1.3820. At the moment, these positions could remain opened.
"Non-commercial" traders are major market players such as banks, hedge funds, investment funds, private, and large investors.
"Commercial" traders are commercial enterprises, firms, banks, corporations, companies that buy foreign currency not for speculative profit, but to support current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.