Forex Analysis & Reviews: 27.03.2025 - GBP/USD

27.03.2025 11:19 AM

GBP/USD – March 27th: Inflation Undermines the Pound

On the hourly chart, the GBP/USD pair continued its decline on Wednesday, nearly reaching the 1.2865 level—missing it by just a few points. There was also no rebound from the 1.2931 level today, although the price came very close. As a result, the decline could resume toward the 1.2865 level. A breakout above 1.2931 would suggest further growth toward the 127.2% Fibonacci level at 1.3003.

The wave situation is quite clear. The most recent completed downward wave did not break the previous low, while the last upward wave broke the previous peak. Therefore, a "bullish" trend is still forming. The pound has shown strong growth recently, even though the news background wasn't strong enough to justify such aggressive buying. However, most traders are reluctant to buy the dollar under any economic conditions due to Donald Trump's ongoing tariff policies, which could harm future economic growth in the U.S. and globally.

Wednesday's news supported the bears. The UK's core and headline consumer price indices came in 0.1% below expectations, both slowing in February compared to January. Thus, bears had reasons to attack. Overnight, Donald Trump dampened the outlook for the dollar by introducing new 25% tariffs on all countries importing cars into the U.S. The dollar fell, but only by 40 points—whereas just a few weeks ago, such news would have caused a 150-point drop. Therefore, I believe the dollar's growth is likely to continue in the near term. Today, the final Q4 U.S. GDP figure will be released. If it remains above 2.3%, the bears may continue to apply pressure—though not strongly, as Trump's frequent tariffs make it difficult for the dollar to rally.

On the 4-hour chart, the pair continues to rise. I do not expect a significant decline in the pound until the price breaks below the ascending channel. A rebound from the 50.0% Fibonacci level at 1.2861 could signal a reversal in favor of the pound and some growth toward the 38.2% retracement level at 1.2994. However, I believe the decline was too weak to justify a renewed bullish trend. A confirmed break below 1.2861 would open the door to further decline toward the 61.8% Fibonacci level at 1.2728.

Commitments of Traders (COT) Report:

Sentiment among the "Non-commercial" trader category became more bullish in the latest reporting week. Long positions among speculators increased by 1,155, while short positions grew by only 946. Bears have lost their advantage. The gap between long and short positions now stands at nearly 30,000 in favor of the bulls: 96,000 vs. 67,000.

In my view, the pound still has downward potential, but recent developments could cause a long-term shift in the market. Over the last three months, long positions decreased from 98,000 to 96,000, while short positions fell from 78,000 to 67,000. However, more significantly, over the past 7 weeks, longs increased from 59,000 to 96,000, and shorts decreased from 81,000 to 67,000. Let me remind you—these are the "7 weeks of Trump's leadership..."

Economic Calendar for the U.S. and UK:

U.S. – Final Q4 GDP figures (12:30 UTC)
U.S. – Initial Jobless Claims (12:30 UTC)

On Thursday, the economic calendar includes two entries, one of which is quite important. The news background could moderately influence market sentiment in the second half of the day.

GBP/USD Forecast and Trading Tips:

Selling opportunities were available on a rebound from the 1.3003 level on the hourly chart with targets at 1.2931 and 1.2865. The first target has been met, the second has not. Buying opportunities may arise upon consolidation above 1.2931 on the hourly chart or on a rebound from 1.2865 with targets at 1.3003 or 1.2931. At the moment, the movement is nearly flat, so the 1.2931 level is not considered strong.

Fibonacci levels are drawn from 1.2809 to 1.2100 on the hourly chart and from 1.2299 to 1.3432 on the 4-hour chart.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.