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GBP/USD – 1H.
Hello, dear traders! On the hourly chart, the GBP/USD pair pulled back and started falling. However, the quotes are above the uptrend corridor. Thus, after the pullback is completed, the pair is likely to begin rising again. As I said previously, the current hot topic among traders remains rallies, riots, and protests in the United States. From my point of view, the pound, which has been experiencing serious problems in recent years, cannot constantly grow on the events related to the unrest in the United States. Yesterday, Andrew Bailey, governor of the Bank of England, said that the United Kingdom and banks should prepare for the lack of agreement with the European Union - that is, prepare for the worst.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair pulled back on the way to the correction level of 0.0% - 1.2647. There has been no rebound. Moreover, no bearish divergences have been formed. Thus, there is no signal for sales on the current chart. If the price consolidates above the Fibonacci retracement level of 0.0%, the British pound is likely to strengthen. In such a case, the price may rise further to new Fibonacci retracements.
GBP/USD – Daily.
As for the daily chart, the quotes consolidated above the correction level of 23.6% - 1.2355, which increases the likelihood of continued growth in the direction of the next correctional level of 0.0% - 1.2646.
GBP/USD – Weekly.
On the weekly chart, the pound-dollar pair performed a false breakout of the bottom trend line and rebounded from it. Thus, until the quotes consolidate below this line, there is a great chance that the price may move down in the direction of two downward trend lines.
News overview:
On Wednesday, the UK services PMI was released. However, traders did not pay attention to the news. The pound continues to be in demand among traders solely due to the current situation in the United States. As soon as mass rallies and protests are suppressed, the British pound, as well as the euro, is likely to start falling again or it may happen even earlier. Reports from the United States did not affect traders's sentiment.
News Calendar for USA and UK:
The following reports are expected during the day:
Construction PMI in the UK and the number of initial and repeated applications for unemployment benefits in the US.
On June 4, the UK will release another secondary report on business activity in the service sector. The United States will deliver a more important report on jobless claims. Nevertheless, traders are paying close attention to the events that are happening in the US at the moment. Thus, reports may be ignored.
COT report (Commitments of traders):
According to the latest COT report, large speculators in the foreign exchange market have been opening primarily new Short-contracts for the reporting week. Their number in the Non-commercial group increased by almost 5,000. Meanwhile, speculators were reluctant to open Long-contracts. And this is the main difference with the euro as speculators have been opening Long contracts more willingly. Thus, 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 in this group also remains higher (58,000 - 42,000). The total number of new Short-contracts (column "Total") has grown significantly compared to Long-contracts over the reporting week. However, this week the pound is gaining ground very vigorously indicating that the bullish sentiment among large traders is improving. If the new COT report does not show a strong growth of Long-contracts in the group of speculators, this will suggest only that they are preparing for a serious sell-off of the British pound.
Forecast for GBP/USD and recommendations for traders:
Under the current conditions, it is preferable to sell the pound with the targets at 1.2354 and 1.2171, if the price rebounds from the level of 1.2647. However, it has not happened yet. It is better to consider buying the pound, if the pair closes above the 1.2647 level.
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 profit, 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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