GBP/USD – 1H.
Hello, traders! According to the hourly chart, the pound/dollar pair performed a reversal in favor of the British currency and resumed the growth process. So far, the British pound is growing in pair with the dollar, which is quite strange, given how the negotiations between London and Brussels ended last week. The whole subject of negotiations is beginning to resemble a farce. The same farce as a year or two ago was around the vote in the UK Parliament on Brexit. The negotiations are at a dead end, no one wants to give in, everyone accuses each other of not wanting to give in and all at the same time declare that they want to sign an agreement. Last week, the next stage of negotiations ended ahead of schedule, and this week a new one began. At the end of July, Boris Johnson is expected to visit Brussels for a personal meeting with Ursula von der Leyen and other EU leaders. However, I do not believe that the British Prime Minister will be able to personally sort out all the disputed points and agree with Brussels. It seems that traders are now at a crossroads. On the one hand, it is dangerous to buy the pound because of Brexit, on the other hand, the coronavirus epidemic in the United States does not allow you to buy the US currency. The balance between these currencies is very shaky at this time.
GBP/USD – 4H.
On the 4-hour chart, the pound/dollar pair rebounded from the corrective level of 50.0% (1.2444) and turned in favor of the British currency and resumed the growth process in the direction of the corrective level of 38.2% (1.2530). The pair's rebound from this level will work in favor of the US dollar and resume falling in the direction of 1.2444. Fixing quotes above the level of 38.2% will increase the probability of further growth towards the next Fibo level of 23.6% (1.2637).
GBP/USD – Daily.
On the daily chart, the pair's quotes performed a rebound from the corrective level of 50.0% (1.2306) and an increase to the Fibo level of 61.8% (1.2516). The rebound from this level will work in favor of the US currency and resume the fall in the direction of 1.2306. This option also supports a 4-hour chart.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair performed a false breakdown of the lower trend line and rebound from it. Thus, until the pair's quotes are fixed under this line, there is a high probability of growth in the direction of two downward trend lines.
Overview of fundamentals:
On Monday, the UK released the business activity index for the construction sector, which was 55.3, significantly exceeding market expectations. However, the mood of traders is influenced now by the topic of negotiations with Brussels and the topic of coronavirus in the United States.
News calendar for the US and UK:
On July 7, the UK and the US will not have any important economic reports. There is no information background for the pound/dollar pair today.
COT (Commitments of traders) report:
The latest COT report for the British pound was quite interesting, especially against the background of the previous one. It turned out that large traders in the reporting week actively increased short-contracts (+8359), but did not forget about long-contracts (+3990). Thus, the "Commercial" group was in a bearish mood during the reporting week. And this mood fully corresponded to the nature of the movement of the British dollar, as this currency fell in the week of June 24-30. The "Commercial" group increased its long-term contracts during the reporting week, however, we are more interested in the "Non-commercial" group. This group has 56,000 short contracts and 35,000 long contracts in total. Thus, I believe that in the future, the pound will resume falling.
Forecast for GBP/USD and recommendations to traders:
I recommend selling the pound today with the goals of 1.2444 and 1.2358, if a new rebound from the level of 38.2% (1.2530) is made. New purchases of the pair can be opened with the goal of 1.2637, if the pair completes a consolidation above the level of 1.2530.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
