GBP/USD – 1H.
Hello, traders! According to the hourly chart, the pound/dollar pair performed a consolidation over the downward trend corridor, so the current mood of traders changed to "bullish". However, yesterday the pair's quotes also performed a reversal in favor of the US dollar, receiving a little support from the information background. In America, several quite good reports were released, and news continues to arrive from the UK about the failures in the Brexit negotiations. Yesterday, it was again reported that the negotiating groups met and decided nothing. Neither London nor Brussels is willing to make concessions and cannot agree on any of the most contentious issues. Thus, the probability that the deal will be concluded before the end of 2020 is no more than 5%. For the pound, this news is extremely bad. The UK economy without a trade agreement with the European Union could shrink even further.
GBP/USD – 4H.
On the 4-hour chart, the pound/dollar pair rebounded from the corrective level of 38.2% (1.2530), turned in favor of the US dollar and fell to the Fibo level of 50.0% (1.2444). Closing the pair's exchange rate below this level will work in favor of continuing the fall of quotes in the direction of the next corrective levels of 61.8% (1.2358) and 76.4% (1.2250). Today, the divergence is not observed in any indicator. A rebound from the Fibo level of 50.0% will allow traders to expect a reversal in favor of the British pound and a return to the level of 1.2530.
GBP/USD – Daily.
On the daily chart, the pair's quotes returned to the corrective level of 50.0% (1.2462). The process of falling can be resumed in the direction of the Fibo level of 38.2% (1.2215) only in the case of a rebound from 1.2462.
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:
There were no important economic reports in the UK on Thursday. However, the information about another failure in the negotiations between Brussels and London was enough for traders to return to buying the dollar. Statistics from this country also helped the US currency, as the unemployment rate fell, and Nonfarm Payrolls were stronger than traders' expectations.
News calendar for the US and UK:
UK - PMI for services (08:30 GMT).
There will be no interesting economic reports on July 3. Thus, the information background will be virtually absent.
COT (Commitments of Traders) report:
The latest COT report for the British pound was even less interesting than the euro report. Major market players trading the British pound were even less active during the reporting week. In total, the Non-commercial group opened only 3,500 new contracts. A more or less normal value is the number of 10,000 or more contracts. Thus, globally, the mood of major market players has not changed at all. In the last 10 days, as in the case of the euro, the British pound first fell, then rose, then fell again. The Non-commercial group was even less active, opening 2,500 new short contracts and closing 343 long ones. Well, the general changes for all groups of traders are completely depressing. Thus, the overall conclusion is disappointing. No special changes in the mood of major market players during the reporting week can be noted.
Forecast for GBP/USD and recommendations to traders:
I recommend selling the British dollar today with the goals of 1.2358 and 1.2250, if the closing level is 50.0% (1.2444). New purchases of the pair can be considered with the goal of 1.2530, if the pair rebounds from the level of 1.2444.
"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.