GBP/USD: correction to an uptrend 03 March 2021, 10:10

GBP/USD: correction to an uptrend

03 March 2021, 10:10

Scenario
Timeframe	Weekly
Recommendation	SELL LIMIT
Entry Point	1.4040
Take Profit	1.3820
Stop Loss	1.4130
Key Levels	1.3500, 1.3850, 1.4140, 1.4330

Alternative scenario
Recommendation	BUY STOP
Entry Point	1.4145
Take Profit	1.4400
Stop Loss	1.4040
Key Levels	1.3500, 1.3850, 1.4140, 1.4330

Current trend

The decline in the GBP/USD rate, which began in the middle of last week, may continue in the short term.

USD grows due to the positive macroeconomic statistics. Thus, according to preliminary data, the US Q4 2020 GDP grew to 4.1% versus 4.0% a quarter earlier. The ISM Manufacturing PMI for February is at 60.8 points against 58.7 points, the highest since September 2018. The number of vaccinated people is growing exponentially and is currently 23.23 per 100 people, which also has a positive effect on USD.

For the pound, the next major event will be Wednesday’s publication of the United Kingdom's annual budget. Finance Minister Rishi Sunak will announce plans for future taxes and expenses. Markets, however, are likely to focus not on the budget itself but on the Fiscal Responsibility Office's March economic and fiscal forecasts, which will be released immediately after the minister's speech.

Support and resistance

After reaching resistance 1.4140 last week, the pair moved into a correction to a long-term uptrend. The target of the decline is the level of 1.3850. Its breakdown allows reaching the support area of 1.3644–1.3512. The RSI indicator has left the overbought zone and is now in the neutral zone.

The medium-term trend remains upwards. Its border lies in the area of ​​1.3850–1.3787. Holding these levels will lead to an increase in prices and renewed annual highs. In case of a breakdown of the support levels, a change in the trend and reaching the target zone 2 (1.3473–1.3434) is possible.

Resistance levels: 1.4140, 1.4330.

Support levels: 1.3850, 1.3500.

Trading tips

Short positions may be opened from the level of 1.4040 with the target at 1.3820 and stop loss 1.4130. Implementation period: 5–7 days.

Long positions may be opened above the level of 1.4140 with the target at 1.4400 and stop loss 1.4040.