The GBP/USD currency pair will trade this week based on the US dollar, the euro, and geopolitical factors. How will these three interconnections affect the British pound? First, it should be understood that for the past two months, movements in the currency market have been entirely dependent on the US dollar. It is the demand for the dollar that fluctuates, leading to opposing movements in the euro and pound. Secondly, the British pound has always closely correlated with the euro. And the fate of the euro, as we have determined, depends on the dollar. Thirdly, the fate of the dollar depends on geopolitical factors—specifically, on the outcome of the negotiations between Iran and the US in Pakistan. As of Sunday, the parties have failed to agree on the most critical issues, particularly regarding the Strait of Hormuz. Nevertheless, no details have been disclosed, and negotiations may continue.

Thus, this week, movements in the pair will again depend 90% on geopolitics. What interesting events are happening in the UK and the US to cover the remaining 10%? In Great Britain, GDP reports for February and industrial production for the same month will be published, along with a speech by Bank of England Governor Andrew Bailey. Bailey's speech could influence trader sentiment. Let us remember that inflation surged worldwide in March, and the UK is no exception, although the relevant report has not yet been published. However, inflation in the UK has been higher in recent years compared to the EU or the US, so it is likely to accelerate significantly as well. The report is due on March 22.

According to forecasts, the Consumer Price Index is expected to jump from 3.0% to 3.4%, though these are rather optimistic estimates. For example, US inflation accelerated by 0.9% in a single month. Therefore, Andrew Bailey's statements will impact the pound's movements at least in the short term. If Bailey indicates a willingness to raise the key interest rate as early as April, this information will support buyers.

In the US, there is not much of interest to note. If the market ignores GDP reports, inflation, and labor market data, what are the chances of reacting to reports on new home sales or industrial production? In our view, minimal. Therefore, this week, particular attention will focus on Andrew Bailey's speech (Christine Lagarde will also speak), along with geopolitical factors. As mentioned, it is indeed geopolitics that the market will reference when making trading decisions.

Technically, on higher timeframes, the upward trend is maintained, whereas on the 4-hour timeframe, it is only beginning and could reverse at any time. If peace in the Middle East is not achieved, the GBP/USD pair could quickly resume its downward trajectory.

The average volatility of the GBP/USD pair over the last five trading days is 103 pips, which is considered "average" for the pound/dollar pair. On Monday, April 13, we expect movements within a range limited by levels 1.3358 and 1.3564. The upper regression channel has turned downward, indicating a trend change. The CCI indicator has entered the overbought zone, warning of a potential downward correction. However, market movements still primarily depend on geopolitics rather than the technicals on the 4-hour timeframe.

Nearest support levels:

S1 – 1.3428

S2 – 1.3367

S3 – 1.3306

Nearest resistance levels:

R1 – 1.348

R2 – 1.3550

R3 – 1.3611

Trading Recommendations:

The GBP/USD currency pair has begun to recover but has yet to overcome its three latest local maxima. Donald Trump's policies will continue to exert pressure on the US economy; therefore, we do not anticipate growth in the US dollar in 2026. Thus, long positions with targets at 1.3916 and above remain relevant when the price is above the moving average. If the price is below the moving average line, shorts can be considered with targets at 1.3306 and 1.3245 based on geopolitical foundations. In recent months, almost all news and events have turned against the British pound, resulting in a prolonged downward trend. Geopolitics remains a key factor.

Explanations for Illustrations:

Regression channels help determine the current trend. If both are directed in the same way, it indicates a strong trend.

The moving average line (settings 20.0, smoothed) defines the short-term trend and direction in which trading should proceed.

Murray levels serve as target levels for movements and corrections.

Volatility levels (red lines) indicate the probable price channel in which the pair is likely to trade over the next day, based on current volatility readings.

The CCI indicator's entry into the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal in the opposite direction is approaching.