GBP/USD – 1H.
Hello, traders! According to the hourly chart, the pound/dollar pair performed a new reversal in favor of the British currency and resumed the growth process. I have built a new upward trend corridor that quite well visualizes the current picture of things and characterizes the mood of traders as "bullish". But the information background for the British currency remains unfavorable. Although, it seems that large traders do not think so. First, a new round of Brexit negotiations between London and Brussels started on Monday. All the previous ones failed, this time Michel Barnier flew to London. Second, British Finance Minister Rishi Sunak said that the government is considering various ways to stimulate consumption in the post-crisis period. One of the suggested options is to distribute vouchers for 500 pounds for adults and 250 pounds for children. It is expected that vouchers can be used to pay for purchases and services in the most affected sectors of the economy. On the one hand, these actions will clearly stimulate the economy, on the other hand, they mean that the current state of the economy is deplorable.
GBP/USD – 4H.
On the 4-hour chart, the pound/dollar pair resumed the growth process and secured above the corrective level of 38.2% (1.2530). Thus, the growth process can be continued towards the next Fibo level of 23.6% (1.2637). Today, the divergence is not observed in any indicator. The pair's rebound from the Fibo level of 23.6% will allow traders to expect a reversal in favor of the US dollar and a slight fall in the direction of the corrective level of 50.0% (1.2444).
GBP/USD – Daily.
On the daily chart, the pair's quotes secured above the corrective level of 61.8% (1.2516). Thus, the growth process can be continued in the direction of the Fibo level of 76.4% (1.2776), especially since this option is supported by lower charts.
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 economic reports in the UK and America on Tuesday. Thus, traders could only consider the general information background, which was not unambiguous. Nevertheless, traders still continued to buy the British dollar.
News calendar for the US and UK:
On July 8, the UK and the US will again not have any important economic reports. The information background will again be absent today for the pound/dollar pair.
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 thousand short contracts and 35 thousand long contracts in total. Thus, I believe that in the future, the pound will resume falling. At least this is evidenced by the falling interest of large traders in long. But to work out this assumption, you need graphical signals.
Forecast for GBP/USD and recommendations to traders:
I recommend selling the pound today with the goals of 1.2444 and 1.2358, if the close is made under the corrective level of 38.2% (1.2530). New purchases of the pair can now be opened with the goal of 1.2637, since the pair was fixed 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.
