GBP/USD. March 18. COT report. Andrew Bailey: the British economy will contract by 4% in the first quarter of 2021

GBP/USD – 1H.

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According to the hourly chart, the quotes of the GBP/USD pair performed an increase almost to the corrective level of 38.2% (1.3980). There was no rebound from it, however, there was a reversal in favor of the US currency. Thus, at the moment, the process of falling in the direction of the Fibo level of 50.0% (1.3900) may begin. Closing the pair's rate above the level of 38.2% will work in favor of continuing growth in the direction of the next corrective level of 23.6% (1.4079). Today, for the British, much will depend on the meeting of the Bank of England and the speech of Andrew Bailey, its governor. According to various surveys, traders do not expect any changes in the monetary policy of the Bank of England, however, important information can still be announced. Let me remind you that if the US economy is recovering quickly, and will recover even faster, thanks to the new $ 1.9 trillion aid package, then the UK economy did not recover at all this winter. Many experts expect GDP to fall in the fourth quarter (although the first estimate was positive +1%), and Andrew Bailey himself said that the country's economy will contract by 4% in the first quarter. Thus, traders expect new incentives and programs to support the economy from the regulator. The government has already released its budget for 2021, however, the central bank is also required to take measures to stimulate the recovery. Traders will again wait for hints or direct statements regarding negative rates and the timing of their possible introduction. Perhaps we will talk about a new expansion of the quantitative easing program. Thus, today the British will be at the mercy of the Bank of England and the evening speech of Jerome Powell.

GBP/USD – 4H.

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On the 4-hour chart, the GBP/USD pair closed under the ascending trend line, however, the rebound from the level of 1.3850 allowed the growth process to resume to the corrective level of 161.8% (1.3979). The rebound of quotes from this level will work again in favor of the US currency and the resumption of the fall in the direction of the level of 1.3850. The bearish divergence of the CCI indicator increases the probability of a rebound from the level of 161.8%. Closing the rate above the level of 161.8% will work in favor of further growth in the direction of 1.4126.

GBP/USD – Daily.

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On the daily chart, the pair's quotes continue to be above the ascending trend line. In the long term, the "bullish" mood of traders is still preserved. Closing the pair's rate above the Fibo level of 127.2% (1.4084) will work in favor of continuing growth towards the next corrective level of 161.8% (1.4812).

GBP/USD – Weekly.

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On the weekly chart, the pound/dollar pair completed a close over the second downward trend line. Thus, the chances of long-term growth of the pound are significantly increased.

Overview of fundamentals:

There was no major report or other events in the UK on Wednesday. And all the events in the United States have already been described and analyzed in the article on the euro/dollar.

News calendar for the United States and the United Kingdom:

UK - the decision on the main interest rate of the Bank of England (12:00 GMT).

UK - planned volume of asset purchases by the Bank of England (12:00 GMT).

UK - summary of monetary policy (12:00 GMT).

UK - votes of the ILC members on the main interest rate and the planned volume of asset purchases (12:00 GMT).

US - number of initial and repeated applications for unemployment benefits (12:30 GMT).

US - Federal Reserve Board of Governors Chairman Jerome Powell will deliver a speech (15:55 GMT).

On Thursday, all the main news will concern the Bank of England and the decision taken at the meeting. However, the evening performance of Jerome Powell should not be missed.

COT (Commitments of Traders) report:

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The latest COT report from March 9 on the British was quite interesting. A week earlier, I drew readers' attention to the fact that the nature of the COT reports on the euro and the pound were opposite. This time, the mood of the "Non-commercial" category of traders in the UK also became more "bearish". During the reporting week, speculators closed 5.5 thousand long contracts and opened only 344 short contracts. Thus, the belief that the Briton will continue to grow is falling among the major players. But it is falling at a much weaker rate than that of the major players in the European market. So the British pound is much less likely to fall than the euro and much more likely to rise than the euro.

GBP/USD forecast and recommendations for traders:

I do not recommend buying the British today, as the probability of a rebound from the area of 1.3980-1.4000 is too high. However, in the case of a confident close above it, purchases are possible with a target of 1.4079. It is recommended to sell the pound if there is a rebound from the area of 1.3980-1.4000 on the hourly chart with targets of 1.3900 and 1.3820.

Terms:

"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.

"Commercial" - 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" - small traders who do not have a significant impact on the price.

The material has been provided by InstaForex Company - www.instaforex.com

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