The dollar fell for a week by 0.97 % against the pound, ending the trading session on Friday near 1.6729. The dollar significantly weakened against most currencies on Forex on the base of the negative attitude towards them by market participants due to release of a relatively weak economic reports on Friday, on the 4th of April. At the same time, the growth of the pound to the dollar is supported by strong economic data released in the UK. Trading week ended on the 7-11 of April, and Forex traders summarized their activities.
Experts of binary options broker Optionova summed up the trading week from April 7 to the 11th of April, from viewpoint of fundamental analysis.
Fundamental analysis of the currency pair GBP/USD of the past trading week of 7-11 April on Forex
Monday, the 7th of April. British pound began its strengthening against the dollar from minimum of Friday on the 4th of April near the level 1.6151 after issuing a poor employment report in the USA in March, rising on Monday till the level close to 1.6621.
Tuesday, the 8th of April. The pound rose more than for 140 points against the dollar after a stronger -than-expected report on industrial production in the UK. This day pound showed the largest growth from the level near 1.6606 to 1.6753.
Wednesday, the 9th of April. The Bank of England began a two-day session devoted to monetary policy. The pound rose to the dollar during the trading day with a level near 1.6724 to 1.6796. The positive picture of growth pounds to the dollar was spoiled by the trade balance issue in the UK. The decline in exports of goods, according to the report, shows the weakness of the foreign trade sector, which does not facilitate recovery of the British economy. The main movement of currency pairs occurred after the publication of minutes of the March meeting of the Federal Reserve System (FRS) in the USA.
After learning of them, market participants were defined with the downtrend of the dollar against other currencies because of the tendency to the FRS to easing monetary policy for a long time. Detailed information about the information contained in the records of the U.S. Federal Reserve can be found in the survey of the 10th of April.
Thursday, April 10. This day ended with a meeting of the Bank of England, where it was decided to leave monetary policy unchanged, and the interest rate - at the minimum value of 0.5%. Announcement of the results of the meeting had effected the pound, which reached a maximum in 2014 in the area of 1.6821, and when it met strong resistance at this level, it fell for the first time this week till the area 1.6753.
Friday, April 11. On Friday there was a correction of the dollar against other currencies, aimed at strengthening of it. It is also likely that the correction of the dollar was due to the closing of positions of market participants before the end of the trading week. British pound began to decline to the dollar after the leading index of economic development of Great Britain, which grew by only 0.4 % in February compared with a rise of 0.6 % in January and signaled about further economic recovery of England in next 6 months without acceleration, which was in winter. The pound fell against the dollar to levels near 1.6786 to 1.6716 on the basis of the closing of the trading day.
How Forex traders earn on the dollar in tandem with the pound
Experts of Optionova (included in the binary options brokers rating of Academy Masterforex-V) are trading on the Forex upon a unique trading system, combining fundamental and technical analysis of financial instruments. Proceeding from the general weakening of the dollar on Forex and the uptrend on the pound, experts have discovered a pair of long trades GBP / USD near 1.6580 level and recorded profits of more than 200 points higher than 1.6790. This area is marked on the chart in yellow color.
At the 4 - hour timeframe of the currency pair GBP / USD ending of corrective decline of pound to dollar exchange rate in the long-term trend ended near the 1.6464 level, a minimum of 24 March. Then began the first wave of growth, which reached a maximum near 1.6684. Postponing corrective Fibonacci levels of the minimum, or the start of wave 1 to its maximum, you can see that the pullback of pound to dollar exchange rate was about 61.8% on blue dotted level of Fibonacci.
Next, began the third wave of pound’s growth to dollar exchange rate, which amounted to 161.8 % of the first wave pulse movement. The third wave peaked near the 1.6821 level, which began with a correction downward movement. The decreasing of pound to dollar stopped in the range of the maximum level, which a pound reached since the establishment of minimal interest rate of 0.5 %. In the third wave of impulse movement around this level a price repeatedly consolidated that indicates the strength of this level.
Friday’s extremum identified support and resistance levels for the pound, break of which next week will show traders the likely direction of the currency pair GBP / USD on Forex. Resistance level is near 1.6786 or 88.2 % Fibonacci of the third wave, the level of support - 1.6715 or 61.8 % Fibonacci of the third wave.
If the dollar continues to decline against pound under long-term trend, it is likely to break through the resistance level on the chart up and further strengthening of the pound above the maximum 2014 year near 1.6821. Further growth targets of pound can be counted on the daily timeframe. This option is shown with a green arrow.
If the correction of pound to dollar exchange rate continues, after breaking through the support level, it is likely the further decline in the pound on the chart to the levels of congestion of Fibonacci retracements of the first and third wave near the 1.6684 to 1.6660 and further below, in the area of pivot MF 1.6605, after penetration of which the long-term and medium-term uptrend may change to a downward movement of the dollar against to the pound. This option is indicated by a red arrow.