GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair made a second attempt at strong growth, however, it stopped near the corrective level of 23.6% (1.3057). And if the euro has been growing over the past day, the British currency has not. And from my point of view, this is a very remarkable moment. Perhaps traders have finally realized that the trade agreement between the UK and the European Union is once again in danger of collapse. Michel Barnier and David Frost have been trying for almost two weeks to reach a consensus on the most "sensitive" issues, but as it turned out this morning, this was not possible. Thus, it is the Briton who can now continue the fall. Michel Barnier stated: "Despite the EU's efforts to find solutions, there are still very serious differences on issues of equal competition, management, and fisheries. These are the necessary conditions for any economic partnership." Thus, now we can once again say that the parties failed to reach an agreement, and the deadline is only 10 days away. London and Brussels were supposed to complete negotiations on October 15 but then decided to extend them for another month to still try to conclude a deal. As you can see, this didn't make much sense. But now Boris Johnson can start implementing the draft law "on the internal market", which violates previously reached agreements with the EU, and the EU can start legal proceedings on the fact of London's violation of the current Brexit agreement.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a reversal in favor of the US currency and consolidated under the corrective level of 38.2% (1.3010), which allows us to count on a further drop in quotes in the direction of the next Fibo level of 50.0% (1.2867). However, as in the case of the European, I recommend paying more attention to the hourly chart today, which shows changes in the mood of traders more quickly.
GBP/USD – Daily.
On the daily chart, the pair's quotes have consolidated under the corrective level of 76.4% (1.3016), which now allows us to expect a fall in the direction of the next corrective level of 61.8% (1.2709).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair closed under the lower downward trend line, thus, a false breakout of this line followed earlier. However, in recent weeks, the pair has made new attempts to gain a foothold over both trend lines.
Overview of fundamentals:
On Wednesday, the UK's index of business activity in the service sector was higher, but none of the traders paid attention to it, as the topics of counting votes in America and the failure of negotiations in Brussels were much more important.
News calendar for the United States and the United Kingdom:
UK - decision on the main interest rate of the Bank of England (07:00 GMT).
UK - decision on the planned volume of asset purchases by the Bank of England (07:00 GMT).
UK - Bank of England Governor Andrew Bailey will deliver a speech (09:15 GMT).
US - number of initial and repeated applications for unemployment benefits (13:30 GMT).
US - FOMC decision on the main interest rate (19:00 GMT).
US - accompanying FOMC statement (19:00 GMT).
US - FOMC press conference (19-30 GMT).
On November 5, the news calendar contains not only a summary of the FOMC meeting but also a summary of the Bank of England meeting with a speech by Governor Andrew Bailey. In addition, traders continue to wait for the final results of the US presidential election.
COT (Commitments of Traders) report:
The latest COT report on the British pound showed that the mood of the "Non-commercial" category of traders became more "bearish" over the reporting week. Speculators got rid of 8,297 long contracts and 3,408 short contracts. Thus, in general, speculators got rid of any contracts for the British. However, it is mostly from long-contracts. This suggests that the major players do not believe in the pound. It is really extremely difficult to do this in the current conditions, as the prospects for the British economy remain extremely vague. Since August, the total number of long contracts in the hands of speculators has decreased to an absolute minimum – only 31,013. The total number of open contracts among all categories of traders has been almost the same for two months.
Forecast for GBP/USD and recommendations for traders:
Today, I recommend selling the GBP/USD pair with targets of 1.2866 and 1.2793, if the quotes close under the Fibo level of 50.0% (1.2925) on the hourly chart. I recommend buying the British dollar with the targets of 1.3057 and 1.3135 if the closing above the level of 1.2984 on the hourly chart is completed.
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 for current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
