empty
 
 
You are about to leave
www.instaforex.eu >
a website operated by
INSTANT TRADING EU LTD
Open Account

22.05.202009:36 Forex Analysis & Reviews: GBP/USD on May 22. COT report. Obstacle at 1.2303 discourages bulls from more buying. Now GBP/USD could drop back to 1.2095

This information is provided to retail and professional clients as part of marketing communication. It does not contain and should not be construed as containing investment advice or investment recommendation or an offer or solicitation to engage in any transaction or strategy in financial instruments. Past performance is not a guarantee or prediction of future performance. Instant Trading EU Ltd. makes no representation and assumes no liability as to the accuracy or completeness of the information provided, or any loss arising from any investment based on analysis, forecast or other information provided by an employee of the Company or otherwise. Full disclaimer is available here.

GBP/USD – 1H

Exchange Rates 22.05.2020 analysis

Hi dear traders! On the 1-hour chart, GBP/USD reversed in favor of the US currency and began a gradual decline. Thus, market sentiment again changed into bearish, though the chart has not revealed yet any bearish patterns. The UK releases less news than the EU. The latest news was about a speech of new Bank of England Governor Andrew Bailey. He admitted the scenario of employing negative interest rates. Besides, traders are betting on expansion of QE program by Bank of England. At present, QE is measures at £645 billion. However, the program is expected to be expanded by £100 or even £200 billion in June – July. The British economy urgently needs extra stimulus. The other burning issue is certainly Brexit which has been ruling public sentiment in the UK over the recent 4 years. On the Brexit front, the sterling has no solid fundamentals. The latest round of the talks between London and Brussels ended with a zero result. Both parties expressed discontent with the outcome and confessed the lack of progress.

GBP/USD – 4H

Exchange Rates 22.05.2020 analysis

On the 4-hour chart, GBP/USD was rejected from 50.0% fibo correction at 1.2303 and reversed in favor of the US dollar. On May 22, the currency pair is carrying on falling towards 38.2% fibo correction at 1.2095. Today none of the indicators signals any divergence to appear soon. In case the pair is rejected off 38.3% fibo correction, the door will be open for the price reversal in favor of the sterling. So, the price will resume growth towards 50.0%. If the pair closes below 38.2% fibo correction, this will increase the odds of a further decline towards the next correctional level of 23.6%at 1.1834.

GBP/USD – Daily

Exchange Rates 22.05.2020 analysis

On the daily chart, GBP/USD made a reversal in favor of the British pound and fixed above 38.2% fibo at 1.2174. Thus, the prospects for a further advance of the sterling are indicated on the chart with a longer timeframe. At the same time, two charts with shorter timeframes signal a possible decline of the pair. If the pair closes above 38.2% fibo correction, this move will trigger a decline towards 50.5% fibo at 1.2028.

GBP/USD – Weekly

Exchange Rates 22.05.2020 analysis

On the weekly chart, GBP/USD made a fake breakout of the lower border of the trendline. In other words, before the price is able to trade firmly above this line, the odds are that the pair will continue growing along two upper trendlines but in the long term.

Economic calendar

On Thursday, Markit posted PMIs on the UK manufacturing and service sectors. Business activity in the service sector surged almost twice in May to 27.8. The manufacturing PMI rose 8 points to 40.6.

Economic calendar for US and UK for today:

UK – retail sales with and ex auto fuel are due at 08-00 GMT.

On May 22, traders have already got to know data on the UK retail sales. The report reads that retail sales with auto fuel contracted 22.6% year-on-year and ex auto fuel dropped 18.4% annually. No wonder, today traders are poised to sell the British currency.

COT report (Commitments of traders):

Exchange Rates 22.05.2020 analysis

The latest COT report showed that professional market players decided to increase deals on the sterling. Notably, this strategy concerns both long bets and short bets. This week, large traders felt like opening new short contracts. On the whole, it would be wrong to say that demand for the US dollar is extremely buoyant but demand for the sterling is too low. Apparently, a new COT report, which is due today, is likely to reveal minor changes compared to the previous one. Personally, I foresee a further increase in the volume of short contracts from the Non-commercial group.

Outlook for GBP/USD and recommendations:

It would be a good idea to sell the sterling under the current market conditions with the target level at 1.2095 because the pair has been rejected off 50.0% fibo correction at 1.2303. Long positions on GBP/USD would be reasonable once the pair holds firmly above the level of 1.2303 with the target at 1.2416.

Terms

The Non-commercial group means large market players such as banks, hedge funds, private and institutional large investors.

The Commercial group comprises financial institutions, firms, banks, corporations, companies which buy the currency not for speculative profits but for maintaining their operation and export/import activities.

Non-reportable positions refer to small retail investors who do not make a serious impact on market quotes.

Samir Klishi
Analytical expert of InstaForex
© 2007-2024

Open trading account

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.




You are now leaving www.instaforex.eu, a website operated by INSTANT TRADING EU LTD
Can't speak right now?
Ask your question in the chat.

Turn "Do Not Track" off