GBP/USD 1H
The pound/dollar pair significantly lost more than the euro/dollar pair yesterday, thanks to the decision of the Bank of England to expand the program of repurchase of securities by 100 billion euros. As a result, the British currency fell into the support area of 1.2400-1.2420 by the end of the day. Thus, further downward movement will now depend on overcoming this area. In addition, traders managed to overcome the upward trend line, which now makes life easier for bears. GBP/USD also continues to remain inside the downward channel, so the prospects for declining further are good. If quotes rebound from the support area of 1.2400-1.2420, then the bulls will be able to seize the initiative and try to raise the pair, at least, to the critical Kijun-sen line. And further movement will depend entirely on whether the pair remains inside the channel.
GBP/USD 15M
Both linear regression channels are again directed downward on the 15-minute timeframe, so the pair continues to show its willingness to continue moving down.
COT Report
The latest COT report for the British pound, published on Friday, showed a strong drop in the number of open purchase contracts among professional traders. Their number decreased by almost 7,000, but there were only 705 new open buy-positions. Thus, traders didn't buy the pound sterling very much, and nevertheless, the British currency rose in price in the reporting week. If you look at the behavior of large traders in all categories, then they closed both purchase contracts and sale contracts. A total of 25,000 contracts were closed. Thus, in general, the pound was not in demand, but at the same time it was growing against the dollar. The pair is falling quite strongly this week, so today's COT report is likely to show a decrease in net positions for the British pound.
The fundamental background for the GBP/USD pair is starting to be negative. There are still no fundamentally new statements or news on the main topic for the pound sterling - Brexit. But traders reacted to the rapid sales of the British currency after it became known that the Bank of England had expanded its asset repurchase program by £100 billion. Also, market participants are seriously worried that at the next meetings may resort to negative rates, since, according to the general opinion, the British economy will not cope with the consequences of the coronavirus crisis, Brexit and the absence of a trade deal with the European Union. Additional stimulation will be required. And any stimulation of the economy and additional easing of monetary policy is a bearish factor and is likely to lead to a new fall of the British pound. Federal Reserve Chairman Jerome Powell is set to hold his next speech on Friday, June 19. However, it is unlikely that Powell will add anything else to what was already mentioned this week in Congress. Therefore, the pound/dollar might slightly recover today after what happened on Thursday.
There are two main scenarios as of June 19:
1) The initiative for the pound/dollar pair passed completely into the hands of sellers, since the upward trend line was overcome. Therefore, short positions are currently relevant with a view to the support level of 1.2268. However, we consider it appropriate to first wait until the support area of 1.2400-1.2420 is overcome. Potential Take Profit in this case will be 120 points.
2) Buyers were not able to cope with the onslaught of bears and had let go of the pair. Thus, it is advised to consider purchase orders now but not before you consolidate quotes above the downward channel. In this case, the bulls will be able to count on further growth with the goals of the Senkou Span B line and the resistance level of 1.2740. However, such a development is not expected in the coming days. Potential Take Profit in this case is from 50 to 150 points.
