GBP/USD – 1H.
Hello, traders! According to the hourly chart, the pound/dollar pair performed a reversal in favor of the British currency yesterday and growth in the direction of the upper border of the downward trend corridor. Thus, in general, the mood of traders remains "bearish", and in the coming hours, we can expect a reversal in favor of the US dollar and the resumption of the pair's fall. Yesterday's growth in the British dollar could only be related to data from the UK because the European currency did not show growth. However, this assumption immediately faces problems, as the published report on GDP for the first quarter was worse than traders' expectations, and the latest comments by Prime Minister Boris Johnson are negative. On the one hand, the British Prime Minister promised that the British economy will become stronger after the crisis, and the British government will allocate money to improve infrastructure, repair schools, and hospitals. However, Johnson continues to take a hard line in negotiations with Brussels, which is unlikely to allow for a trade agreement. Thus, the positive for the pound is still a little bit.
GBP/USD – 4H.
On the 4-hour chart, the pound/dollar pair performed a fall to the corrective level of 76.4% (1.2250), rebounding from it and turning in favor of the British currency with an increase above the Fibo level of 61.8% (1.2358). However, the hourly chart shows that the process of falling can be resumed today. Closing the pair's exchange rate under the Fibo level of 61.8% will work in favor of the US dollar and resume the fall. There are no pending divergences today, and closing quotes over the descending corridor on the hourly chart will work in favor of the British dollar and the continuation of the growth process.
GBP/USD – Daily.
On the daily chart, the pair's quotes performed a new reversal in favor of the US currency and anchored under the Fibo level of 50.0% (1.2462). Thus, the process of falling can be continued in the direction of the corrective level of 38.2% (1.2215).
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:
On Tuesday, the UK released a report on GDP for the first quarter, which showed a reduction of 2.2% q/q and 1.7% y/y, which is worse than forecasts. However, this did not stop traders from unexpected purchases of the British currency.
News calendar for the US and UK:
UK - manufacturing PMI (08:30 GMT).
US - change in employment from ADP (12:15 GMT).
US - index of business activity in the manufacturing sector (13:45 GMT).
US - ISM manufacturing index (14:00 GMT).
US - Publication of the minutes of the Fed meeting (18:00 GMT).
On July 1, the most interesting events and reports are in America. Each report will be interesting in its way, and the evening publication of the Fed minutes will reflect the mood of the monetary committee participants at the meeting itself.
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 pound today with the goal of 1.2250 if the closing is made under the Fibo level of 61.8% (1.2358). New purchases of the pair can be considered with the goal of 1.2444 if the pair performs a consolidation above the trend corridor on the hourly chart.
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.
