GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair continued to fall on Wednesday and turned out to be at the level of 100.0% (1.3800) by the end of the day. The rebound of the pair's rate from this level will allow traders to count on a reversal of the pair in favor of the British dollar and some growth in the direction of the level of 1.3859. Closing the pair above the descending trend corridor will change the mood of most traders to "bullish." Fixing quotes under the Fibo level of 100.0% will increase the chances of a further fall in the direction of the corrective level of 127.2% (1.3679). In addition to a fairly important report from ADP in the US, a fairly important report on GDP for the first quarter was also released in the UK yesterday. It turned out that the British economy shrank by 1.6% q/q and by 6.1% y/y. Traders expected slightly more optimistic data. However, the Briton did not fall under new mass sales because of this report. It also fell quite modestly after the data on the state of the labor market from ADP came out, although the European currency showed an impressive drop on the same report. The chief economist of the Bank of England, Andy Haldane, said that inflation in the UK could reach 4% by the end of the year. He called the current state of affairs "the most dangerous moment that inflation targeting has faced." Haldane noted that the QE program should be immediately curtailed to avoid a sharp jump in inflation. Let me remind you that Andy Haldane is the only member of the monetary committee of the Bank of England who voted at the last two meetings in favor of curtailing the economic support program. At first glance, this is a negative statement for the British, but traders could see a slight increase in the probability of curtailing the QE program in the near future. Perhaps it is because of him that the pound did not show a noticeable drop yesterday.
GBP/USD – 4H.
The GBP/USD pair on the 4-hour chart performed a consolidation under the corrective level of 23.6% (1.3870). Thus, the decline in the pair's quotes can be continued in the direction of the next corrective level of 38.2% (1.3642). There are no brewing divergences today.
GBP/USD – Daily.
The pair's quotes closed under an important trend line on the daily chart, which now allows traders to expect a further drop in quotes in the direction of the Fibo level of 100.0% (1.3513).
GBP/USD – Weekly.
The pound/dollar pair performed a close over the second descending trend line on the weekly chart. Thus, the chances of long-term growth of the pound remain.
Overview of fundamentals:
On Wednesday, the calendars of economic events in the UK and the US contained one important report each, but the reaction of traders followed only the data from ADP.
News calendar for the United States and the United Kingdom:
UK - index of business activity in the manufacturing sector (08:00 UTC).
UK - Governor of the Bank of England, Andrew Bailey, will make a speech (08:00 UTC).
UK - PMI index for the manufacturing sector (08:30 UTC).
UK - Governor of the Bank of England, Andrew Bailey, will make a speech (09:00 UTC).
US - number of primary and secondary applications for unemployment benefits (12:30 UTC).
US - ISM manufacturing index (14:00 UTC).
On Thursday, the calendars of economic events in the UK and the US contain many entries. I recommend paying attention to the ISM index in the US and the speeches of Andrew Bailey.
COT (Commitments of Traders) report:
The latest COT report from June 22 on the British showed that the mood of the major players has changed in favor of the bears. The number of long contracts closed by speculators amounted to 7 thousand. At the same time, about 10 thousand short contracts were opened. Thus, the "bearish" mood among the "Non-commercial" category of traders has intensified, which allows us to count on a further fall in the British dollar. However, the total number of long contracts concentrated in the hands of speculators still exceeds the total number of short contracts by 14 thousand (two weeks ago, the gap was two times). Thus, the Briton has not yet lost all chances of growth.
Forecast for GBP/USD and recommendations to traders:
I recommend new purchases of the British when closing on the hourly chart above the descending corridor with targets of 1.3906 and 1.3972. I recommend selling the pound if the closing is performed on the hourly chart under the level of 1.3800 with the goal of 1.3679.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign 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.
