Figure 2: The GBPUSD on the daily chart
The key levels of supports and resistances are:
is in the band 1.3040 - 1.3070.
is at the level of 1.3200 - 1.3280.
is at level 1.3330-1.3510.
We can also take the moving average of SMA 100 as the resistance.
is located in the band 1.2760 - 1.2820. This support zone was tested last week, but then the price rose and Friday’s candlestick closed at its upper part. We'll see if the support will hold the price. If not, the price has free room to move to the support 2.
is in the range around 1.2530 - 1.2580. This level is breaking through the previous resistance.
Support 3 is in band 1.2180-1.2200
In addition, we present the overall sentiment of the market, which according to the COT (Commitment of Traders) report presented every Friday shows that last week large speculators accumulated their long positions as the number of contracts increased from the previous 29 300 to 29 600. That means that large speculators continue to trust in the pound and expect it to strengthen.
What awaits us this week?
Negotiations between the EU and the UK on the form of the trade agreement will start on Monday. Negotiations can be expected to be very tough, depending on the current perspective of both partners. The United Kingdom has indicated that it is ready to trade with the EU under WTO rules and thus to introduce tariff barriers if EU proposals are likely to put Britain's sovereignty at risk. This attitude is rather negative for the pound.
Also from a macroeconomic perspective, this week will be relatively busy for the British pound. On Monday, PMI data in the manufacturing sector will be reported, on Tuesday in construction and on Wednesday PMI in services that are very important to Britain. Governor BoE Carney will be speaking on Thursday at 18.00 CET, which is expected to be highly volatile on currency pairs with the British pound.
Because March 6, 2020, is the first Friday of the month, the US employment data, the so-called NFP, will be reported, which will also have a significant impact on the GBPUSD pair.
Recent reports on the evolution of the coronavirus epidemic may continue to negatively affect the British pound as well.