GBP/USD: investors fear high inflation in the US 15 March 2021, 10:27

GBP/USD: investors fear high inflation in the US

15 March 2021, 10:27

Scenario
Timeframe	Weekly
Recommendation	BUY STOP
Entry Point	1.3992
Take Profit	1.4178
Stop Loss	1.3900
Key Levels	1.3690, 1.3863, 1.3992, 1.4178

Alternative scenario
Recommendation	SELL STOP
Entry Point	1.3863
Take Profit	1.3690
Stop Loss	1.3930
Key Levels	1.3690, 1.3863, 1.3992, 1.4178

Current trend

The GBP/USD pair stopped declining and began to correct upward, trading around 1.3910.

The British authorities note that the beginning of the third wave of the coronavirus pandemic will begin in the country this fall. Yesterday, the head of the National Statistics Office (ONS) Ian Diamond stressed that the virus may become a part of life, as it was with other similar diseases. However, the National Health Service's program to double the rate of vaccination soon can significantly smooth out the possible economic losses from a sharp jump in infected.

Earlier, GBP sharply decreased amid disappointing data on UK GDP, which fell by 2.9% MoM and 9.2% YoY. Industrial Production for January also decreased by 2.3% against an increase of 0.3% for December.

American investors are waiting for the market reaction to the $1.9 trillion bailout package and wait to enter the market, as it is unclear how the rise in inflation will affect the Fed’s actions. The regulator predicts that the indicator may rise above 2.0%, however, according to the forecast of the University of Michigan, it may exceed 3.1%, which will restrain a possible change in the monetary policy rhetoric.

Support and resistance

Locally, the instrument corrects, forming the second shoulder of the Head and shoulders reversal pattern. Technical indicators hold a local buy signal. Alligator indicator’s EMA fluctuations range significantly narrowed, and the histogram of the AO oscillator is in the positive zone.

Resistance levels: 1.3992, 1.4178.

Support levels: 1.3863, 1.3690.

Trading tips

After reversal and continued growth or consolidation above the local maximum of 1.3992, buy positions with the target at 1.4178 are relevant. Stop loss is 1.3900. Implementation period: 5 days.

After a decrease or consolidation below the local support of 1.3863, sell positions with the target at 1.3690 are relevant. Stop loss – 1.3930.