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GBP/USD – 1H.
Hello, traders! According to the hourly chart, the pound/dollar pair continues the growth process and performed a close over the upward trend corridor, which indicates an increase in the "bullish" mood of traders. And the entire information background remains the same. Events in the US, a new stage of negotiations between London and Brussels on a trade agreement, as well as on other aspects of life and relations after Brexit. So far, traders are paying more attention to rallies and protests in the US, which often end in clashes with the police. The racist scandal threatens to result in something more than just rallies and protests. Donald Trump is even going to put down a popular revolt with the help of military forces. However, it needs congressional approval to do so. Thus, for now, the riots continue, and the US dollar continues to fall. It is also reported that Americans are dissatisfied with the high unemployment rate and falling economic growth, which is also the reason for the rallies. Media reports have already reported 8,000 detainees and 11 dead in clashes with police.
GBP/USD – 4H.
On the 4-hour chart, the pound/dollar pair continues to grow in the direction of the Fibo level of 0.0% (1.2647). The bearish divergence formed the day before could not even stop the current growth of the pair's quotes. The pair's rebound from the level of 1.2647 will allow traders to expect a reversal in favor of the US currency and a slight fall in the direction of the corrective level of 23.6% (1.2354). Closing above 1.2647 will increase the probability of the pair continuing to grow, and a new grid of Fibo levels will be built.
GBP/USD – Daily.
On the daily chart, the pair's quotes secured above the corrective level of 23.6% (1.2355), which increases the probability of continuing growth in the direction of the next corrective level of 0.0% (1.2646).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair performed a false breakdown of the lower trend line and rebound from it. Thus, until the pair's quotes are fixed under this line, there is a high probability of growth in the direction of two downward trend lines.
Overview of fundamentals:
There was no major news or reports in the UK on Tuesday. The pound continues to be in demand among traders solely due to the current situation in America. As soon as mass rallies and protests can be suppressed, the British (as well as the euro currency) can begin to decline.
News calendar for the US and UK:
UK - PMI for services (10:30 GMT).
US - change in employment from ADP (14:15 GMT).
US - ISM composite index for the non-manufacturing sector (16:00 GMT).
On June 3, a secondary report on business activity in the service sector will be released in the UK. In America, there are more important indices and reports. However, traders are now paying more attention to events in America, reports may remain ignored.
COT (Commitments of Traders) report:
The latest COT report showed that large speculators of the currency market for the reporting week mainly opened new short-contracts. Their number in the hands of the "Non-commercial" group increased by almost 5,000. Long-term contracts were opened less willingly by speculators. And this is the main difference with the euro, whose Long contracts were opened much more willingly. Thus, we can even say that during the reporting week, the "Non-commercial" group, which is considered to be the engine of the market, strengthened its "bearish" mood. The total number of short contracts held by the company also remains higher (58,000-42,000). The total number of new short contracts (the "Total" column) also increased more strongly than the long one during the reporting week. However, this week the British pound is growing very cheerfully, which suggests that the "bullish" mood among major traders is strengthening. If the new COT report does not show strong growth in long contracts for a group of speculators, I will conclude that they are preparing a serious sale of the English currency.
Forecast for GBP/USD and recommendations to traders:
I recommend making new sales of the pound in the current conditions with the goals of 1.2354 and 1.2171 if the pair closes under the trend corridor on the hourly chart. You can continue buying the English currency with the goal of 1.2647, but new goals will be obtained if the pair closes above this level.
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.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
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