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GBP/USD – 1H.
Hello, dear traders! On the hourly chart, the GBP USD pair reversed and started to fall. Thus, traders' sentiment has changed to bearish again. However, at the moment, there are no new graphical constructions. Thus, I recommend searching for signals and targets on older charts. Andrew Bailey, Governor of the Bank of England, made a statement yesterday. This was a very important event for the pound. The key point of his speech was the assumption of a further reduction in the key interest rate in the future. A few months ago the central bank refused to use this tool. However, the British economy continues to contract. Thus, it requires the introduction of new stimulus packages. Therefore, it was also about expanding the current program of quantitative easing (QE), which currently stands at 645 billion pounds. This information from the Governor of the Bank of England put the pound under pressure. Thus, yesterday, the British currency started falling again.
GBP/USD – 4H.
According to the 4-hour chart, the GBP/USD pair rebounded from the correction level of 50.0% - 1.2303, reversed and started falling in the direction of the correctional level of 38.2% - 1.2095. Upcoming divergence is not observed today in any indicator. If the pair reverses from the Fibonacci retracement level of 38.2%, the pound is likely to rise to the level of 50.0%. If the pair closes below Fibonacci retracement of 38.2%, the pair is likely to decline to the next correctional level of 23.6% - 1.1834.
GBP/USD – Daily.
On the daily chart, the quotes reversed and consolidated above Fibonacci retracement of 38.2% - 1.2215. However, according to today's results, the pair can consolidate at the level of 38.2.
GBP / USD - Weekly.
On the weekly chart, the pound-dollar pair made a false breakout of the bottom trend line. Thus, until the pair quotes consolidate below this line, there is a high probability of growth in the direction of the two upper trend lines in the long term.
Review:
On Wednesday, a report on inflation was released in the UK. Like in the eurozone, inflation plummeted up to 0.8% in April this year compared to April 2019 and by 0.2% from March 2020. The statement of Andrew Bailey put the pound under pressure.
Calendar for USA and UK:
The services and manufacturing PMIs are set for release in the United Kingdom.
The United States will present data on applications for unemployment benefits, as well as its services and manufacturing business activity indexes. Fed's Chairman Jerome Powell will deliver a speech.
On May 21, only business activity indexes in the services and manufacturing sectors will be released in the UK. An important report on jobless claims in the United States will also be delivered. Later, Fed's Chairman Powell will make an important statement.
COT report (Commitments of traders):
The latest COT report showed that professional market players began to increase the number of positions on the British pound. This applies to both long and short positions. Their number increased by 3844 and 4539 for the reporting week. Thus, the greatest increase was in Short-contracts. Moreover, speculators held the majority of Dort-contracts The total number of contracts among all major market participants remains in favor of Longs, but the advantage is not too large. The number of Short-contracts in the hands of speculators is of greater importance. They have an advantage over sell deals of the British pound. Based on this, we can conclude that the pound continues to weaken. More and more professional traders are trying to get rid of this currency. During this week, the pound strengthened insignificantly. However, the general sentiment of traders still remains bearish.
GBP/USD forecast and recommendations for traders:
Under current conditions, it is preferable to sell the pound with the target of 1.2095, since a rebound from the Fibonacci retracement level of 50.0% - 1.2303 occurred.It better to buy the pound, it the pair consolidates above the level of 1.2303 with the target of 1.2516.
TERMS:
Non-commercial are major market players: banks, hedge funds, investment funds, private and large investors.
Commercial are commercial enterprises, firms, banks, corporations, companies that buy currency not for speculative profits, but for ensuring 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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