GBP/USD – 1H.
Hello, traders! According to the hourly chart, the pound/dollar pair performed a reversal in favor of the English currency and began the growth, which allowed it to consolidate over the downward trend corridor. Thus, the mood of traders has changed to "bullish", and further growth of the pair is expected in the direction of the goals of the 4-hour chart. Nothing is happening in the UK right now. After the next round of negotiations between Brussels and London failed, the probability of a deal fell several times. However, the main stumbling block is that the parties can not agree on the territorial waters of Britain, in which the EU countries want to continue to fish. Thus, only one round of negotiations remains until July 1, when it will be necessary to officially declare that the parties are extending or not extending the terms of the "transition period". But it is already clear that Michel Barnier and David Frost are unlikely to be able to agree on even half of all the issues and come to a common opinion on them.
GBP/USD – 4H.
On the 4-hour chart, the pound/dollar pair rebounded from the corrective level of 38.2% (1.2095), turned in favor of the British currency, and rose to the corrective level of 50.0% (1.2303). The rebound of quotes from this Fibo level will work in favor of the US currency and the resumption of the fall of quotes in the direction of the 38.2% level. No indicator has any pending divergences today. Closing the pair's rate above the Fibo level of 50.0% will increase the probability of further growth towards the next corrective level of 61.8% (1.2516).
GBP/USD-Daily.
On the daily chart, the pair's quotes performed a reversal in favor of the English currency and fixed above the Fibo level of 38.2% (1.2215). Thus, the growth can be continued in the direction of the next corrective level of 50.0% (1.2463).
GBP/USD-Weekly.
On the weekly chart, the pound/dollar pair performed a false breakdown of the lower trend line. Thus, until the pair's quotes are fixed under this line, there is a high probability of growth in the direction of the top two trend lines, but in the long term.
Overview of fundamentals:
Several important economic reports were released in the UK on Tuesday. The unemployment rate fell to 3.9% in March, while net average wages rose 2.7%. However, more important was the report on applications for unemployment benefits, which showed 856 thousand applications during April. Despite this report, the British pound continued to grow in yesterday's trading.
News calendar for the US and UK:
UK - consumer price index (08:00 GMT).
UK - parliamentary hearings on the Bank of England's monetary policy report (15:30 GMT).
UK - Bank of England Governor Andrew Bailey will deliver a speech (15:30 GMT).
US - publication of the minutes of the Fed meeting (20:00 GMT).
On May 20, the UK consumer price index was released, which fell in April from 1.5% to 0.8% y/y. However, today there will be much more significant events, such as the speech of the President of the Bank of England, Andrew Bailey.
COT (Commitments of Traders) report:
The latest COT report showed that professional market players have started to increase their positions on the British pound. This applies to both long and short contracts. Their number in the hands of speculators increased by 3,844 and 4,539 during the reporting week. Thus, there was a greater increase in short-contracts and a greater number of speculators in the hands of short-contracts as well. The total number of contracts among all major market participants remains in favor of long, but the advantage is not too great. More important is the number of short contracts in the hands of speculators, and they have an advantage over deals to sell the British pound. Based on this, we can conclude that the position of the British currency continues to deteriorate, and more and more professional traders are trying to get rid of this currency.
Forecast for GBP/USD and recommendations to traders:
I recommend making new sales of the British currency in the current conditions after the rebound of quotes from the Fibo level of 50.0% (1.2303) with the goal of 1.2095. I recommend buying the English currency after fixing the pair above the level of 1.2303 with the goal of 1.2516.
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.
