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GBP/USD – 1H.
Hello, traders! As seen on the hourly chart, the pound/dollar pair performed a reversal in favor of the English currency and resumed the growth process. Thus, the mood of traders on Friday remains "bullish". The information background from the UK is still virtually empty. Even economic reports from Britain have been few in recent times. Thus, traders can only closely monitor the events taking place in the United States. And there, the number one topic at the moment is rallies and protests based on a racist scandal. Moreover, this topic has spread so widely throughout the country that it has even eclipsed the topic of coronavirus. Even former US presidents (Barack Obama, Bill Clinton) have spoken out about the problem of racism in recent days. However, it is not known how long these processions will last. In most cases, they do not have the character of mass riots, but in some cases, it still comes to clashes with the police and pogroms. So far, the president's administration has not been able to calm the protesters, and Donald Trump's proposal to use the army to suppress the rallies has not been supported by either the Secretary of Defense or Congress.
GBP/USD – 4H.
On the 4-hour chart, the pound/dollar pair resumed the growth and reached the corrective level of 0.0% (1.2647). Thus, the rebound of quotes from this Fibo level will work in favor of the US currency and the beginning of a fall in the direction of the corrective level of 23.6% (1.2354). Fixing the pair's exchange rate above the Fibo level of 0.0% will increase the probability of continued growth of quotes, and a new grid of Fibo levels will be built. Today, the divergence is not observed in any indicator.
GBP/USD – Daily.
On the daily chart, the pair's quotes increased to the corrective level of 0.0% (1.2646). Thus, now traders need to understand whether there will be a rebound or a breakout.
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:
On Thursday, the UK released the PMI index for the construction sector, which did not attract the attention of traders. 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 start falling, and maybe even sooner. The report from America on applications for unemployment benefits did not affect the mood of traders.
The economic calendar for the US and the UK:
US - unemployment rate (14:30 GMT).
US - change in the number of people employed in the non-agricultural sector (14:30 GMT).
US - change in average hourly earnings (14:30 GMT).
On June 5, several relatively important reports will be released in the UK. The main thing is whether traders will want to "see" them? During the current week, traders did not pay attention to anything, just selling the US dollar.
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 long 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 selling the British currency in the current conditions with the goals of 1.2354 and 1.2171, if the rebound from the level of 1.2647 is completed (this is not yet the case). I recommend considering new purchases of the pair after closing above the level of 1.2647.
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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