GBP/USD – 4H.

As seen on the 4-hour chart, the GBP/USD pair performed a reversal in favor of the English currency and secured above Fibo level of 61.8% (1.2836) after the formation of a bullish divergence at the CCI indicator. Thus, the growth process of the pair can be continued today in the direction of the correction level of 76.4% (1.3044), but it is unlikely that quotes will be able to close above the upper line of the trend downward channel. In the area of the upper line of the channel, traders can expect a reversal in favor of the US currency and a resumption of the fall in the direction of the lower line of the trend channel. There are no new emerging divergences in any indicator today.

The growth of the GBP/USD pair yesterday did not correspond to the nature of the economic reports released in the UK. Unfortunately, the British pound, or rather traders of the British currency, continue to pay more attention to the news of a political nature and related to Brexit. Thus, yesterday, traders were impressed by the message that the party "Brexit" is not going to compete in the elections with the Conservative Party, but on the contrary, it would try to help it win the most votes. Traders considered positive for the "Briton" in this news, although what exactly is positive from the unspoken pre-election coalition of the two parties supporting the "hard" Brexit. Conservatives are still ready for Brexit with an agreement, but they supported Boris Johnson's initiatives when he intended to withdraw the country from the European Union without any agreements. Thus, it can be considered that the conservatives support the Brexit option "No Deal" as well.

Well, economic reports from the UK yesterday confirmed the worst-case scenarios and assumptions. Gross Domestic Product declined to 1.0% y/y in the third quarter. This is not the final value, but for the pound, it is even worse than if it were final, as traders can expect even more deterioration in this indicator. Industrial production decreased by 1.4% y/y, in the processing industry – by 1.8% y/y. Since yesterday these reports were ignored by traders, it is quite possible to count on the fact that today they "wake up" and together with the reports on unemployment and average wages for September will work them out. Based on this, the probability that the pound will resume falling today is very high. However, any further "positive" news of a political nature can again cause the pound to rise. However, they are not something that cannot be predicted, it cannot even be imagined when the leader of any party or any other high-ranking official makes a "loud" statement.

Forecast for GBP/USD and trading recommendations:

The pound/dollar pair closed above the Fibo level of 61.8% (1.2836), however, given the downward trend channel and its width, I do not expect a serious increase in the British currency. Perhaps the situation will change if the quotes perform a close over the downward channel, but so far this has not happened, I support the option of falling to the lower line of the channel, and possibly lower.

The Fibo grid is based on the extremes of March 13, 2019, and September 3, 2019.