GBP/USD. Preview of the new week. The pound will again try to start an upward - Kakiforex | Forex markets for the smart money. GBP/USD. Preview of the new week. The pound will again try to start an upward GBP/USD. Preview of the new week. The pound will again try to start an upward

April 5, 2021

GBP/USD. Preview of the new week. The pound will again try to start an upward

 The British pound, as we said in our previous articles, also continues to adjust against the upward trend. However, this trend was much stronger and longer than for the euro currency. But the correction against it is much weaker, which is somewhat surprising. However, we have already repeatedly drawn the attention of traders to the fact that a "speculative" factor is present in the pound sterling over the past year. Otherwise, it is impossible to explain such a strong growth of the British currency, even if we take into account all the "global fundamental factors" and do not pay any attention to the failed fundamental background from the UK. Back to the technical picture. At the moment, on the 24-hour timeframe, the pair's quotes bounced off the Senkou Span B line. This line is a little late, however, it is visible how the bears are not able to overcome it. Thus, the pound can now resume the upward trend. This is supported by several factors at once:


1) Markets continue to ignore all the negative fundamental backgrounds from the UK. 

2) The "speculative" factor. 

3) The factor of the continued pumping of the US economy with dollars, which leads to a bloating of the money supply. 

4) The general reluctance of traders to get rid of the British currency and the inability to conduct a normal correction.


Some factors speak in favor of further strengthening of the US currency. For example, the same rapid pace of recovery of the American economy. However, market participants do not pay too much attention to this. In the UK, by the way, the fundamental background has not been too voluminous lately. The country continues to be ahead of schedule in terms of vaccination rates, which gives hope for an acceleration in the recovery of the British economy, which also experienced not the best winter. At the same time, the negative impact of Brexit on the economy of the Foggy Albion continues. We have already written earlier that with the absolute majority of EU countries and the UK, the import and export indicators collapsed in 2021. But these are not just indicators of how many goods were delivered and taken away. This is the trade turnover, which directly affects the GDP indicator. Moreover, the UK's financial sector, which has been completely cut off from the European market, will also suffer damage. And the financial sector is the most important sector for the UK economy. In general, despite the high rate of vaccination, we continue to look at the British future very skeptically. We believe that the pound with such a fundamental background is extremely overbought and generally "out of place". Consequently, we have long been waiting for its powerful fall, however, the markets have not yet had enough of its purchases and continue to believe in it. Thus, the "foundation" was sorted out. However, from a technical point of view, there is an upward trend and you need to follow the trend. Thus, we respect the market and trade with it.


The macroeconomic background in the UK next week - very few. The standard indexes of business activity in the services and construction sectors for March will be published, which are unlikely to differ from the preliminary values of the same reports that were published a few weeks ago. That is, we can hardly expect a reaction to this data at all. And nothing else is planned in Britain. In the United States, business activity indices in the service sector will also be published. As usual, in two versions, Markit and ISM. The second is much more important and theoretically, it can be followed by a reaction of traders. However this is again the final value, so market participants are already ready to see the value of 55.3. Also, reports on production orders, the trade balance, and the producer price index will be released in America. Such data that usually no one pays attention to at all. Recall that on Friday, traders ignored Nonfarm Payrolls, which turned out to be very strong and significantly exceeded the forecasts of experts. So what is the probability that markets will react to the producer price index? Also next week in the States, the minutes of the Fed from the last meeting will be published. However, this event never causes any reaction. In theory, the protocol may contain important information that the markets are not yet familiar with. But we can't even remember the last time something like this happened. Thus, we can conclude that the next week will be empty in macroeconomic terms.


Fundamentally, we don't know what might happen. Maybe there will be an important speech by Boris Johnson or Joe Biden. No one knows yet. Perhaps, market participants with an empty fundamental background will again pay attention to the indicator of the yield of US government bonds. Maybe they'll start paying attention to the stock market. However, these are all rather ambiguous factors, and no one can say even when the markets may start to pay attention to them. Therefore, we are more inclined to believe that the volatility will decrease next week and an outright flat may begin. But we remind you that the absence of news and reports always means flat. We recommend keeping a close eye on the support area of 1.3700-1.3715. If you overcome it, you can count on a new round of downward movement.


Recommendations for the GBP/USD pair:


The pound/dollar pair on the 4-hour timeframe rose to the Senkou Span B line, but could not overcome it or bounce off it. Thus, at the moment, there seems to be a good chance of continuing the upward movement, however, the bulls still need to gain a foothold above the Ichimoku cloud.