The GBP/USD currency pair also traded quite calmly on Wednesday and did not react to the important UK inflation report or to official statements from Iran. Yesterday, we warned that inflation reports are gaining new significance in the current circumstances, particularly since March, when the conflict in the Middle East began, and oil and gas prices soared. February inflation is of little interest to anyone now. Therefore, traders did not see the need to factor in the minimal growth of core inflation in Great Britain.
The same goes for the official statement from the Iranian authorities. Tehran announced that no negotiations with the US are currently taking place and that they are, moreover, considered impractical. Iranian representatives stated that the world could forget about low oil and gas prices as long as Iran's position and sovereignty are not respected, at least by the United States. In simpler terms, Tehran is trying to create conditions under which the entire world unites against Donald Trump and the US, as it is America that started the war in the Middle East. Now the world is reaping the consequences of Trump's geopolitical ambitions. Therefore, if the world wants to unblock the Strait of Hormuz, it must address Washington's position. If not, Iran will continue to block the Strait for all vessels from unfriendly countries.
Of course, we do not know what proposal Donald Trump sent to Tehran through Pakistan, but it is already clear that the likelihood of reaching a peaceful agreement is approaching zero. Iran has been under bombardment for three weeks, yet is expected to end the war with a wave of a magic wand? Unlike Washington and many other economically more developed countries, Iran is prepared to fight for many years. The country has nothing to lose. The standard of living for Iranians has remained at a "below zero" mark for decades. America and its allies will not succeed in lowering it even further to provoke popular uprisings against the current government. All destroyed and bombed facilities will eventually be rebuilt. The main thing is that Iran has not conceded even a square centimeter of its territory, and everything else is negotiable. Therefore, it is the US and Europe that need to think actively about how to bring Iran to the negotiating table. Now, Iran holds a dominant position. It now needs to be convinced to engage in peaceful negotiations, and during those negotiations, something must be proposed that cannot be refused.
Will Trump and passive Europe go for such a scenario? In our opinion, no. Trump would need to concede and turn a blind eye to Iran's nuclear program, which is unlikely. Otherwise, how can the US president explain to his people why the war in the Middle East was necessary? Europe cannot be counted on either. It has long taken a position of "do what you want, just don't involve us." Therefore, it seems we are headed for a protracted conflict that will keep energy prices at their highest levels for a long time.
The average volatility of the GBP/USD pair over the last five trading days is 152 pips. For the pound/dollar pair, this value is considered "high." On Thursday, March 26, we expect movement within a range limited by the levels of 1.3223 and 1.3527. The upper linear regression channel has turned downward, indicating a trend change. The CCI indicator has entered the oversold area twice and has also formed a "bullish" divergence, which once again warns of a conclusion to the downward trend. However, geopolitics currently outweighs technical signals.
Nearest support levels:
S1 – 1.3306
S2 – 1.3184
S3 – 1.3062
Nearest resistance levels:
R1 – 1.3428
R2 – 1.3550
R3 – 1.3672
Trading Recommendations:
The GBP/USD currency pair has been in correction for a month and a half, but its long-term prospects remain unchanged. Trump's policies will continue to exert pressure on the US economy; therefore, we do not expect the US currency to grow in 2026. Thus, long positions with a target of 1.3916 and above remain relevant when the price is above the moving average. When the price is below the moving average line, minor short positions can be considered, with targets at 1.3223 and 1.3184 based on geopolitical factors. In recent weeks, nearly all news and events have turned against the British pound, prolonging the downward trend.
Explanations for Illustrations:
Linear regression channels help determine the current trend. If both are pointing in the same direction, it means the trend is currently strong;
The moving average line (settings 20,0, smoothed) defines the short-term trend and the direction in which trading should currently be conducted;
Murray levels are target levels for movements and corrections;
Volatility levels (red lines) represent the likely price channel in which the pair will spend the next 24 hours based on current volatility metrics;
The CCI indicator—its entry into the oversold area (below -250) or into the overbought area (above +250) indicates that a trend reversal in the opposite direction is imminent.
