GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair continued its growth process towards the corrective level of 61.8% (1.3989) on Thursday. After a slight pullback, the quotes resumed the growth process this morning. The rebound of the pair's exchange rate from this level will allow traders to expect a reversal in favor of the American and a slight fall in the direction of the Fibo level of 50.0% (1.3909). Closing above the level of 1.3989 will increase the probability of further growth in the direction of the next corrective level of 76.4% (1.4089). Meanwhile, an increasing number of traders are beginning to pay attention to the next confrontation between the European Union and the UK. After Brexit has been completed, the parties continue to discuss several other issues that may affect their future economic and trade relations. At the moment, the most acute issue is the Northern Ireland protocol, in which most analysts agree that London is playing a dishonest game.
The Northern Ireland Protocol is part of the Brexit agreement, which was signed at the end of last year. Since this is a bilateral agreement, the consent of both parties is required to make any adjustments to it. However, London insists on revising almost the entire protocol, and the European Union refuses such a proposal. However, London does not want to put up with the numerous checks that occur when sending goods from Britain to the island of Ireland. The European Union does not want to allow even the possibility that Britain could freely enter the European market through the Northern Ireland window. Boris Johnson threatens to withdraw from the Brexit agreement if the European Union does not meet him halfway. Most likely, he is bluffing, as he has done more than once.
Nevertheless, the tension is growing. The British are still practically not reacting to these events. However, the prospect of a deterioration in trade relations between London and Brussels may harm the British economy.
GBP/USD – 4H.
The GBP/USD pair on the 4-hour chart performed a consolidation above the corrective level of 23.6% (1.3870). Thus, the growth process continues towards the next level of 1.4003. Closing the pair's rate above will further increase the probability of continuing growth in the direction of the next corrective level of 1.4240, which is now seen as the maximum target for bull traders. A rebound from the level of 1.4003 will favor the American and some drop in quotes. The bearish divergence allowed us to expect a slight fall. However, the British dollar is likely to continue to grow.
Overview of fundamentals:
On Thursday, the calendar of economic events in the UK did not contain a single entry. However, the British dollar continues to show growth without this, and American statistics only assured bull traders of their rightness.
News calendar for the USA and the UK:
US - main index of personal consumption expenditures (12:30 UTC).
US - changes in the level of expenditures and incomes of the population (12:30 UTC).
On Friday, the calendar of economic events in the UK is empty again. In the US, only fairly mediocre reports will be released, which are unlikely to interest traders. The information background is weak, but the British are still growing and can continue to do so.
COT (Commitments of Traders) report:
The latest COT report on July 20 for the British showed that the mood of major players continues to become more "bearish." In the reporting week, speculators increased 11,642 short contracts and got rid of 1,157 long contracts. The total number of contracts among all categories of traders is already almost the same – 182 thousand each. The number of short contracts in the "Non-commercial" category of traders is already higher than long. Thus, judging by the COT reports, there is a global trend change for the British dollar. However, the British dollar itself is not too eager to go down, but at the same time, it retains the chances of falling to the corrective level of 1.3513 (100.0% on the daily chart).
GBP/USD forecast and recommendations for traders:
Today, you should stay in the purchases of the American, as the closing was made above the level of 1.3910 on the hourly chart with the targets of 1.3990 and 1.4003 on the hourly chart. I recommend selling the pound if there is a rebound from 1.4003 on the 4-hour chart with a target of 1.3910.
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.
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