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Overview of the GBP/USD pair. February 28. Silence in the UK. Smooth preparation for the meetings of the Bank of England

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The GBP/USD currency pair on Friday also tried to recover and "move away" from the crazy Thursday, when the quotes of the British pound fell by 300 points. We have already said that we believe the only reason for the dollar's growth against the euro and the pound is the geopolitical situation in Eastern Europe. However, it should be noted that the pound sterling is moving away from what happened and what is happening is very difficult, much worse than the European currency, which managed to win back most of the losses on the same Friday. The pound has moved away from the lows by only 100-120 points. What awaits us next week and what to expect from the pair?

We believe that the "geopolitical factor" will remain very important for the British currency. First, last week showed that the pound is ready to react much more acutely to what is happening in Eastern Europe than the euro currency. Second, the British pound is still not such a stable currency as the euro. Thus, the "storm" for the euro/dollar may persist, and for the pound sterling - even more so. At this time, by and large, there is no point in considering the technical picture. Today, the pair is below the moving average line but may continue to adjust. Tomorrow, it may collapse down again. Moreover, only this weekend there was such a huge amount of news from the EU countries, which massively began to impose various restrictions on Russia, that the market simply cannot fail to work them out. Thus, if we talk about the fundamental background in the context of the current week, then there are more chances, of course, for the pair to continue falling than for its growth. However, we believe that a correction may still be observed for some time. We believe that the market has not yet fully realized what has happened. Moreover, now it is impossible to clearly understand what will happen in a few days. Everything is changing very quickly, so the market is either panicking or waiting for the situation to settle.

It's practically a holiday in the UK this week.

There is not a single important event on the calendar of macroeconomic events in the UK for the new week. Only indices of business activity in the service, manufacturing, and construction sectors will be published. However, they are unlikely to interest anyone in the current circumstances. In the States, of course, it will be more interesting. As we have already said, data on unemployment, Nonfarm Payrolls, and wages will be published on Friday. Of course, wages and unemployment are unlikely to provoke a reaction from traders. But Nonfarms can do very well. According to experts' forecasts, this figure in February will be 350-450 thousand. Usually, forecasts do not match the actual value. Therefore, we are waiting for either value much higher or values much lower. This report is likely to be the most important during the week. Also this week, business activity indices in the services and manufacturing sectors will be published in the United States, among which there will also be ISM indices, which have more weight for traders than Markit. ADP report on changes in the number of people employed in the private sector for February, applications for unemployment benefits.

All these data, as we believe, can cause a market reaction of no more than 20 points. It should be understood that the market is currently restless, and all the attention of traders will be focused on geopolitics. I would not like to touch on this topic once again, since to a greater extent it still concerns the Russian ruble or the Ukrainian hryvnia, rather than the British pound or the American dollar. But last week has already shown how the dollar is in demand when geopolitics in the world is deteriorating sharply. And it doesn't matter that the recovery started the next day. This means that the market may "fly" from side to side again if the situation escalates. And this applies not only to the foreign exchange market. Boris Johnson continues to advocate the introduction of the toughest sanctions against the Russian Federation, speaking not only for his country but also for the entire European Union, just in case.

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The average volatility of the GBP/USD pair is currently 109 points per day. For the pound/dollar pair, this value is "high". On Friday, February 28, thus, we expect movement inside the channel, limited by the levels of 1.3298 and 1.3516. The upward reversal of the Heiken Ashi indicator will signal a new round of corrective movement.

Nearest support levels:

S1 – 1.3367

S2 – 1.3306

S3 – 1.3245

Nearest resistance levels:

R1 – 1.3428

R2 – 1.3489

R3 – 1.3550

Trading recommendations:

The GBP/USD pair has fallen on the 4-hour timeframe and the "bearish" mood persists. Thus, at this time, it is possible to stay in short positions with targets of 1.3306 and 1.3264 until the Heiken Ashi indicator reverses upwards or after a new downward reversal. It will be possible to consider long positions no earlier than fixing the price above the moving average with targets of 1.3550 and 1.3611, which is not expected today.

Explanations to the illustrations:

Linear regression channels - help determine the current trend. If both are directed in the same direction, then the trend is strong now.

Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which trading should be conducted now.

Murray levels - target levels for movements and corrections.

Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.

CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.


Trading analysis offered by RobotFX and Flex EA.
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