The GBP/USD pair, unlike the EUR/USD pair, is just trying to continue the upward trend. Buyers reached the resistance area of 1.2634-1.2660 for the fourth time in the last few days and unsuccessfully tried to overcome it. Another rebound and correction to the critical Kijun-sen line. However, it was also not possible to gain a foothold below the Kijun-sen line, so at the moment everything looks as if the bulls will make a fifth attempt to go above the designated area today. Bears formally have a good chance of moving down, since the pair's quotes came out of the ascending channel. However, they will need a new fixation under the critical line to expect a fall to the Senkou Span B line. There is no question of a stronger growth of the US dollar now.
Both linear regression channels are directed upwards on the 15-minute timeframe, thus signaling that there is no correction. Thus, it is extremely important for buyers to stay above the Kijun-sen line in order for the upward movement to continue. The latest COT report fully reflects the essence of what is currently happening on the currency market for the pound/dollar pair. Professional traders opened 6,743 Buy-contracts and a total of 12 Sell-contracts during the reporting week. Obviously, they were interested in the pound. The total net position in the commercial category increased by 6,700. The total number of contracts in the category of commercial traders is approximately 115,000, and the preponderance of Buy over Sell was -21 thousand before the last report. Thus, +6,700 in the net position is a serious strengthening of the bullish mood. The British currency fell in price in the first two trading days of the week, but showed a strong growth on Wednesday, thus offsetting all fears about a change in the trend among professional traders, which drive the market.
The fundamental background for the GBP/USD pair has not changed much in recent days. For the first time in a long time, several macroeconomic reports were published at once in the UK, which, I must say, disappointed traders. The biggest disappointment was GDP, which grew by only 1.8% in May. The remaining indicators were generally in line with the forecasts and expectations of traders. Today we are waiting for publications on changes in average wages, as well as on applications for unemployment benefits and the unemployment rate. All forecasts indicate a deterioration in the values of these indicators, which could potentially lower demand for the British pound on July 16. In conjunction with the fact that the pound/dollar pair failed to update the previous three local highs, we believe that the probability of a decline in the pound's quotes is quite high today. As for the prospects for the pound, they are about as vague as in the case of the US dollar. Therefore, we believe that it is more appropriate to trade the pair in the short term. The overall fundamental background is more important for traders now, but do not forget that it is equally bad in both the UK and the US. There is no news on the negotiations between London and Brussels at the moment. Boris Johnson has not yet visited Brussels, so there is no reason for optimism among buyers of the pound now either.
There are two main scenarios as of July 16:
1) The bullish outlook worsened in the first half of the new trading week. At this time, the pair's purchases are temporarily not relevant, as quotes have gone below the rising channel. Thus, we recommend buying the British pound again, but not before overcoming the resistance area of 1.2634-1.2660. The targets in this case are resistance levels 1.2705 and 1.2791. Potential Take Profit in this case will be from 30 to 110 points.
2) Sellers are advised to resume trading on a lower level with targets at support level 1.2497, Senkou Span B line (1.2458) and support level 1.2375 if the pair overcomes the Kijun-sen line (1.2573). Today's reports from the UK can help the pair by pulling it down, as information is unlikely to turn out optimistic. Potential Take Profit range from 60 to 180 points.
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