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27.11.202010:00 Forex Analysis & Reviews: GBP/USD. November 27. COT report. The European Union and France accuse the UK of unwillingness to reach compromises and of dragging out negotiations

GBP/USD – 1H.

Exchange Rates 27.11.2020 analysis

According to the hourly chart, the quotes of the GBP/USD pair performed a new reversal in favor of the US currency and consolidated under the upward trend corridor. They spent several hours below this corridor, after which they tried to resume the growth process. However, they immediately ran into the corrective level of 161.8% (1.3375). Thus, the pair's rebound from this level will work again in favor of the US dollar and will lead to a more obvious closing under the ascending corridor. Meanwhile, traders' faith in reaching a trade agreement with the European Union is slowly fading. This week, the British pound failed to move further up, so there is a high probability that the mood of traders will still change to "bearish". And the situation around the negotiations began to heat up. Last week, the talks were interrupted. This week, they were held in video format, however, by the end of the week, it became clear again that the negotiations were at an impasse and Michel Barnier threatened London that if it is not more lenient, Brussels will withdraw from the discussion of the deal. London replied that it would like to resume negotiations in London face-to-face, however, everything depends on the European Union. At the same time, Paris accused the UK of dragging out negotiations, focusing on minor details while the most important issues are not being resolved. Paris also said that France will not give in to the issue of fishing. Thus, all participants in the negotiation process continue to find it difficult to find a common language, and the negotiations themselves can end at any time.

GBP/USD – 4H.

Exchange Rates 27.11.2020 analysis

On the 4-hour chart, the GBP/USD pair generally continues to grow in the direction of the corrective level of 0.0% (1.3481). The upward trend corridor shows that the current mood of traders remains "bullish". Fixing the pair's rate under this corridor will work in favor of the US currency and the beginning of a fall in quotes towards the levels of 1.3191 and 1.3010.

GBP/USD – Daily.

Exchange Rates 27.11.2020 analysis

On the daily chart, the pair's quotes continue to grow in the direction of the corrective level of 100.0% (1.3513). However, when trading a pair, I recommend paying more attention to the lower charts. They are now more informative. Two corridors are especially important, one of which the quotes have already left.

GBP/USD – Weekly.

Exchange Rates 27.11.2020 analysis

On the weekly chart, the pound/dollar pair completed a new close above the lower downward trend line, although a false breakout of this line followed earlier. In recent weeks, the pair has made new attempts to gain a foothold over both trend lines.

Overview of fundamentals:

There were no reports or major events in the UK and the US on Thursday. The information background on this day was practically absent.

US and UK news calendar:

On November 27, the US and UK news calendars are empty again. Today, there will be no information background, however, there may be news on the negotiation process between London and Brussels.

COT (Commitments of Traders) report:

Exchange Rates 27.11.2020 analysis

The last two COT reports showed a fairly sharp increase in the number of open short contracts for the "Non-commercial" category of traders. This suggests that speculators continue to believe in the fall of the British dollar in the very near future. Over the past three weeks, speculators have been building up short contracts and closing long ones. In general, major players are more afraid of opening new contracts, so their total number is falling. This is seen in the table above. Thus, conclusion number one: major players are afraid of the uncertainty associated with the trade deal and the British economy, so they do not want to trade the pound more actively. Conclusion number two: speculators believe more in the fall of the pound than in its growth.

GBP/USD forecast and recommendations for traders:

Today, I recommend selling the GBP/USD pair with targets of 1.3264 and 1.3191 if a close is made under the ascending corridor on the 4-hour chart or under the ascending corridor on the hourly chart. I recommend to be careful with the pair's purchases now, as the COT report shows the faith of major players in the fall of the pound, and there is still no trade deal between London and Brussels.

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 for current activities or export-import operations.

"Non-reportable positions" - small traders who do not have a significant impact on the price.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Samir Klishi,
Analytical expert
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