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GBP/USD – 1H.
Hello, traders! According to the hourly chart, the pound/dollar pair performed a reversal in favor of the US dollar and continues a slight fall. Thus, the mood of traders has again changed to "bearish", and the British dollar is again inclined to fall. Nothing else can be expected in the current conditions. According to all incoming data, it is the British economy that is "sinking" the fastest. And the key reason for this sinking is not even the global crisis caused by the COVID-2019 epidemic, but the fact that Britain entered this crisis while already in a crisis caused by Brexit. Now there is a "double" crisis in Britain, and at the end of this year, when the final break with the European Union occurs, London will also trade with EU countries under WTO rules and tariffs, which will create additional pressure on imports, exports and trade turnover. Of course, the British economy will recover from the crisis one day and start growing. However, traders and investors are not too happy with the "someday" interpretation. So the pound continues to be sold.
GBP/USD – 4H.
On the 4-hour chart, the pound/dollar pair, after rebounding from the corrective level of 50.0% (1.2303), performed a reversal in favor of the US currency. Thus, the fall of quotes continues on May 25 in the direction of the Fibo level of 38.2% (1.2095). The rebound of quotes from this level will allow traders to count on a reversal in favor of the English currency and the resumption of growth again to the level of 50.0%. Closing the pair's exchange rate under the Fibo level of 38.2% will increase the chances of continuing the fall in the direction of the next corrective level of 23.6% (1.1834). Today, the divergence is not observed in any indicator.
GBP/USD – Daily.
On the daily chart, the pair's quotes performed a reversal in favor of the British dollar and fixed above the Fibo level of 38.2% (1.2174). Thus, the growth prospects of the British pound are still preserved on the current chart. However, two small charts show the possible fall of the pair. Closing the exchange rate under the corrective level of 38.2% will work in favor of resuming the fall on this chart as well.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair performed a false breakdown of the lower trend line. Thus, until the pair's quotes are fixed under this line, there is a high probability of growth in the direction of the top two trend lines, but in the long term.
Overview of fundamentals:
On Friday, the UK released a report on changes in retail trade volumes in April. The report showed a decrease of 22.6% y/y and 18.1% m/m. With such statistics, it is difficult for the pound to expect growth.
The economic calendar for the US and the UK:
On May 25, the calendars of economic events in the UK and the US are empty, so there will be no background information for the pound/dollar pair today.
COT (Commitments of Traders) report:
The latest COT report showed a sharp increase in the activity of major market players. The total number of open new contracts for the week up to May 19 was more than 25,000. Thus, major players began to pay attention to the pound. However, for the pound itself, this information is not too optimistic, since mainly new contracts led to its new fall. Despite the fact that in general, large players opened both short and long contracts in almost equal numbers, speculators looked more towards contracts for sale, opening 8,000 at once. Thus, professional players believe that the pound will continue to get cheaper and get rid of it. Graphical analysis coincides with the "bearish" mood of traders.
Forecast for GBP/USD and recommendations to traders:
I recommend making new sales of the British pound in the current conditions now with the goal of 1.2095 since the rebound from the Fibo level of 50.0% (1.2303) was performed. I recommend buying the English currency after fixing the pair above the level of 1.2303 with the goal of 1.2516.
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 to ensure current activities or export-import operations.
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