03.11.202011:13 Forex Analysis & Reviews: GBP/USD Analysis and Forecast for November 3, 2020

Good day, dear traders!

The pound/dollar currency pair mostly met expectations and moved in accordance with the forecast made the day before in yesterday's trading. However, as you know, forecasts are a thankless task and given such an important event as the election of the President of the United States of America. In this regard, all other events fade but I do not think that this will last for a long time.

This Thursday can be considered the main day for the GBP/USD currency pair. First, the Bank of England will announce its decision on interest rates and the scope of the asset purchase program. Secondly, in connection with the outbreak of the second wave of the COVID-19 pandemic in the UK, a lockdown will be introduced on Thursday which will remain in effect until December 2. Thirdly, on the same day, the results of the extended meeting of the Federal Reserve System will be summed up and when the decision on rates will be known, new economic forecasts will be published, and half an hour after that, the press conference of fed Chairman Jerome Powell will begin. Friday's reports on the US labor market will also be a significant day for the entire currency market and for the GBP/USD pair. Given the factors listed above, most likely, the market will be overwhelmed by a wave of increased volatility and since the pound is one of the most speculative and volatile currencies, the "British" should expect very strong and sharp movements, while it is possible that they will be multidirectional.

Daily

Following the results of yesterday's trading, a candle with a very long lower shadow and a small bearish body appeared on the daily chart, which, in its essence and form, is a reversal model. If the market accepts this signal, then we should expect the quote to grow today. As of this moment, this is exactly what is happening. The pair is hitting the lower limit of the daily Ichimoku indicator cloud, trying to penetrate it. Despite the fact that the cloud itself is quite small, the blue Kijun line (1.2990) and the red Tenkan line (1.3002) can provide strong resistance to growth attempts. Moreover, these lines are located near the iconic psychological and technical level of 1.3000. If today's trading closes above the Tenkan line, there will be prerequisites for further growth in the strong technical zone of 1.3060-1.3080. In principle, taking into account the possible and rather strong reaction of investors to the interim results of the US presidential election, these prices can be reached already during today's trading.

The bearish scenario will become relevant only after the price returns to the black and exponential average, and if yesterday's lows will be updated at 1.2853 with the mandatory closing of the day below this level.

H4

Based on the four-hour chart, after the appearance of the highlighted reversal candlestick pattern, the pair began to strengthen. However, the pound bulls will be tested in the form of the moving averages used (200 EMA, 89 EMA and 50 MA), as well as the repeatedly mentioned 1.3000 level. At the end of the article, the pair is already testing the orange 200 exponent for a breakdown, but the other two moving averages and the 1.3000 mark are higher.

If the price zone 1.2970 - 1.3000 shows bearish candlestick analysis patterns on this or hourly timeframes, this will be a signal to open short positions for GBP/USD. In the case of a true breakdown of the 50 MA level and the 1.3000 level, it will be possible to consider buying options on the rollback. In any case, given the specifics of the current situation and the possible frequent change in market sentiment, I do not recommend setting large goals. I believe that at the moment 30 to 50 points of profit will be quite enough.

Good luck!