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GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair performed yesterday a rebound from the Fibo level of 76.4% (1.2928), a reversal in favor of the British, and an increase of 240 points. These are the results of yesterday when there was no particularly optimistic news for the Briton. Moreover, the "clowning" with Brexit and the EU-Britain negotiations continues. The parties have already failed nine rounds of negotiations, accused each other of unwillingness to concede, said that they should prepare for a no-deal Brexit, and this week agreed to resume negotiations and expressed hope for progress in the near future. Moreover, both the EU and British representatives made such statements. What does this mean? Contrary to the words of Boris Johnson that London wants to conclude a trade agreement. But each side believes that the opposite delegation should concede. Plus, very little time was initially available to the groups of Michel Barnier and David Frost. Boris Johnson continues to declare his readiness to complete Brexit without an agreement, but at the same time extends the deadline for negotiations, which he set. Why is the pound getting more expensive on this news? There can only be one explanation for this. Traders believe that the deal will eventually be concluded. If the parties eventually announce the absence of it, it will be a severe blow to the pound's positions, which may collapse down in the best traditions of the last four years.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair secured above the corrective level of 38.2% (1.3010), which allowed it to continue the growth process in the direction of the corrective level of 23.6% (1.3191). The rebound of quotes from this level will work in favor of the US dollar and the beginning of a fall in the direction of the level of 38.2%. Fixing the pair's rate above the level of 23.6% will increase the probability of continuing growth towards the next Fibo level of 0.0% (1.3481).
GBP/USD – Daily.
On the daily chart, the pair's quotes consolidated above the corrective level of 76.4% (1.3016), which allows us to expect further growth in the direction of the corrective level of 100.0% (1.3513).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair closed under the lower downward trend line, thus, a false breakout of this line followed earlier. However, in recent weeks, it has made new attempts to gain a foothold over both trend lines.
Overview of fundamentals:
On Wednesday, the UK consumer price index for September was released, which was not particularly impressive. However, the British pound rose by more than 200 points, and it is unlikely that such a strong increase was caused by the inflation report, which did not even exceed traders' expectations.
US and UK news calendar:
UK - Bank of England Governor Andrew Bailey will deliver a speech (09:25 GMT).
US - number of initial and repeated applications for unemployment benefits (12:30 GMT).
On October 22, the UK news calendar includes a speech by Bank of England Governor Andrew Bailey, which can be very interesting.
COT (Commitments of Traders) report:
The latest COT report on the British pound that was released last Friday showed that the category of "Non-commercial" traders got rid of short contracts in the reporting week, closing more than 6 thousand in total. Long-contracts speculators opened only 149. Thus, the mood of major speculators has become more "bullish", which is quite strange, since in recent months there has been a desire to sell the British, rather than buy it. However, the last three weeks are left to the bull traders. At the same time, it is very difficult to say that the pound sterling is showing strong growth. Most likely, the situation is as follows: due to the strong information background, major players often change their decisions, and the British often changes the direction of movement.
Forecast for GBP/USD and recommendations for traders:
Today, I recommend buying the GBP/USD pair with a target of 1.3211, as it was fixed above the corrective level of 127.2% (1.3096) on the hourly chart. I recommend selling the British dollar with a target of 1.3010 if the rebound from the level of 23.6% on the 4-hour chart is completed.
Terms:
"Non-commercial" - large 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 for 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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