GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair performed a slight drop to the trend line, after which they turned in favor of the British and calmly resumed the growth process in the direction of the corrective level of 261.8% (1.3698). Traders' sentiment remains bullish due to the upward trend line. If yesterday there was a meeting of the Fed, which did not say anything bad for the US currency, then today there will be a meeting of the Bank of England, where deplorable things may sound for the pound. The fact is that the Bank of England has been beating around the bush about negative rates for a long time. Rumors that the regulator is preparing to lower the rate even more have been circulating for about six months. This was repeatedly stated by the Governor of the Bank of England, Andrew Bailey. And the current state of the UK economy already requires additional incentives. In general, it is difficult and scary to imagine what will happen in 2021. As of December 17, there is still no positive information from the negotiations between London and Brussels on a trade deal. Thus, with a high degree of probability, from January 1, Britain and the EU will start trading under WTO rules, which will hit the British economy in the first place. Thus, the economy of the United Kingdom, which is going through a bad time, may shrink even more in 2021 and the Bank of England cannot stay on the sidelines. At the last meeting, it already expanded the asset purchase program. This time, if it does not lower rates (the probability of this is low), then at least the governor should make a statement about when and under what circumstances this will happen. Such information can put pressure on the British. However, now I would not vouch for this, as both the euro and the pound continue to grow without visible tension and ignore the information background.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a consolidation above the corrective level of 100.0% (1.3481), which allows traders to expect continued growth in the direction of the next Fibo level of 127.2% (1.3701). Today, the divergence is not observed in any indicator.
GBP/USD – Daily.
On the daily chart, the pair's quotes returned to the corrective level of 100.0% (1.3513). A new rebound from this level will again work in favor of the US currency and the beginning of a fall in quotes. Closing above it will increase the chances of further growth towards the next corrective level of 127.2% (1.4084).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair performed an increase to the second downward trend line. A rebound from it in the long term will mean a reversal in favor of the US dollar and a long fall in the British dollar's quotes.
Overview of fundamentals:
On Wednesday, the UK released reports on business activity in the manufacturing and services sectors, as well as the consumer price index. The first two indicators exceeded the values of the previous month, however, inflation disappointed traders, slowing to 0.3% in November.
The economic calendar for the US and the UK:
UK - interest rate decision of the Bank of England (12:00 GMT).
UK - planned volume of asset purchases by the Bank of England (12:00 GMT).
UK - summary of monetary policy (12:00 GMT).
US - number of initial applications for unemployment benefits (13:30 GMT).
On December 17, in the UK, the Bank of England will summarize the results of the meeting. No major decisions are expected, however, a summary on monetary policy and the state of the economy may disappoint buyers of the British dollar.
COT (Commitments of Traders) Report:
The latest COT report showed a new increase in the number of long contracts in the hands of speculators. This time, their total number increased by 2,866 contracts, and the number of short-contracts decreased by 9,189 units. Thus, the mood of speculators has become much more "bullish" and is becoming so for the third week in a row. Given this fact, the growth of the British dollar is quite understandable, although the information background is not entirely on the side of the British currency. However, given that speculators have again taken up quite large purchases of the pound, we can assume its new growth. In this regard, I recommend that you closely monitor the level of 1.3513 on the daily chart. Closing above it will confirm the intention of traders to re-open long contracts. The total number of open long and short contracts for all groups of traders remains approximately the same.
GBP/USD forecast and recommendations for traders:
At this time, I recommend that you be extremely careful with opening any deals on the British. The pair continues to move very raggedly and often changes direction. Purchases of the British with the target level of 200.0% (1.3499) brought profit. Since there was a consolidation above this level, it was possible to open new purchases with the target level of 261.8% (1.3698). I recommend selling the British dollar with the target level of 161.8% (1.3375) if a close is made under the ascending trend line 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.
