GBP/USD – 1H.
Hi dear traders! In the 1-hour chart, GBP/USD again climbed to 1.3698. It is the 5th attempt to continue growth above this level. If the pair fixes above this level, it will encourage a further growth towards 127.2% fibo that is 1.3744 and 1.3820. A new decline from 1.3698 will open the way down to the 100.0% fibo correction that is 1.3625.Meanwhile, the third lockdown is in full swing in the UK. The Bank of England Governor has again lamented that the domestic economic is losing momentum. Interestingly, the pound sterling has been immune to such news, thus extending its rally. The pound bulls still take no notice of the information background in the UK. By the way, the US has been reporting tepid economic data.
Regular comments from the Bank of England Governor are no way ordinary events. In a nutshell, Andrew Bailey warns that there is still a long way until the British economy shows the green shoots of recovery after the crisis. Besides, it is more difficult to predict when the domestic economy will recover to the pre-crisis levels. Nevertheless, the pessimistic rhetoric of Andrew Bailey does not affect the bullish sentiment on the sterling. In addition, the Governor points out that the overall picture remains complicated due to the second and third coronavirus waves which began in September. Another remark from the Governor is that people's intentions of managing their savings matter a lot for the economic recovery.
GBP/USD – 4H.
In the 4-hour chart, GBP/USD had a growth to the correctional level of 127.2% that is 1.3701. A new drop from this level will be to the US dollar's advantage. So, the pair will decline towards the correctional level of 100.0% that is 1.3481. If the price closes above 1.3701, this will increase the likelihood that GBP/USD will continue its climb towards the next Fibonacci correction of 161.8% that is 1.3977.
GBP/USD – Daily.
In the daily chart, GBP/USD ensured fixation above the 100.0% fibo correction that is 1.3513. Then, the price rebounded. Hence, the pair could expend its climb towards 127.2% fibo that is 1.4084. If the price closes above the 100.0% fibo correction, the US dollar will take advantage and the pair will fall.
GBP/USD – Weekly.
In the weekly chart, GBP/USD closed above the second downward trendline. Thus, the pair has more chances now of a long-term uptrend.
On Wednesday, apart from a speech by Andrew Bailey, the UK reported on consumer inflation which jumped to 0.6% in December annually from 0.3% in the previous month. The report supported the sterling in the second half of the trading day.
The US Labor Department is due to release a weekly update on initial and continuing unemployment claims.
On January 21, the economic calendar is empty for the UK. However, the US will post data on jobless claims which is expected to be worthy of attention.
COT (Commitments of traders) report:
The latest COT (Commitment of Traders) report from January 12 eventually displayed a serious change in sentiment of large market long contracts that is biggest number of long contracts opened over a few recent months. Therefore, speculators express obviously bullish sentiment on GBP. AT the same time, traders opened 3,200 short contracts. All in all, speculators opened nearly 14,000 new contracts. Such activity has not been recorded for long. Apparently, traders are betting on the sterling's strength. So, they are ready to trade GBP more robustly than in a few recent months. The last-minute Brexit deal was settled. The UK left the EU. The Kingdom and the EU are still trading with each other without customs tariffs. So, traders are regaining interest in the pound sterling.
Outlook for GBP/USD and trading tips
It would be a good idea to open new long positions on GBP when the pair closes above 1.3698 in the 1-hour chart with upward targets at 1.3744 and 1.3820. Alternatively, sell positions on GBP/USD could be opened when the price drops from 1.3698 in the 1-hour chart with a downward target at 1.3625.
The Non-commercial category includes major market players: banks, hedge funds, investment funds, private, and large investors.
The Commercial category embraces commercial enterprises, firms, banks, corporations, companies that buy currency not to obtain speculative profit, but to ensure current activities or export-import operations.
The category of Non-reportable positions means small traders who do not have a significant impact on the price.
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