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GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair performed an increase to the corrective level of 127.2% (1.3744) four times over the past 4 days. Each time it was followed by a rebound with a reversal in favor of the US currency. And each time the pullback down was less than the previous one. Last time, the pair's quotes failed to consolidate even below the level of 1.3698. Thus, I believe that today the pair can close above the level of 127.2%, which will increase the probability of further growth towards the next level of 1.3820. In general, I can conclude that the British pound continues to be in strong demand among traders. The information background remains very contradictory. This week, the Bank of England will hold a meeting in the UK (on Thursday). The main intrigue will be the issue of negative rates, which have been rumored for more than six months. The latest comments from Bank of England representatives contradict each other. If Silvana Tenreyro believes that it is time to cut the key rate, as the economy is recovering at a very slow pace, then the Governor of the Bank of England, Andrew Bailey, believes that negative rates are too problematic and create pressure on the banking system. Thus, it can be assumed that there was a split in opinion among the monetary committee. Therefore, the result of the vote for a downward change in the interest rate will be of great importance on Thursday. If at least one or two members of the ILC vote for a rate cut, it could cause the pound to fall. However, this will happen only on Thursday, and in the first half of the week, the British pound can continue the growth process.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a new fall to the ascending trend line and a new rebound, which worked in favor of the British dollar and the resumption of the growth process in the direction of the Fibo level of 161.8% (1.3977). Closing the pair's rate under the trend line will allow traders to count on a reversal in favor of the US currency and a slight drop in the direction of the corrective level of 100.0% (1.3481).
GBP/USD - Daily.
On the daily chart, the pair's quotes performed a consolidation above the corrective level of 100.0% (1.3513), and then rebound from it. Thus, the growth process can be continued in the direction of the Fibo level of 127.2% (1.4084).
GBP/USD - Weekly.
On the weekly chart, the pound/dollar pair completed a close over the second downward trend line. Thus, the chances of long-term growth of the pound are significantly increased.
Overview of fundamentals:
On Friday, there were no economic reports in the UK, so all the attention of traders was turned to the reports in the US. However, in the US, the reports were also not the most important.
News calendar for the United States and the United Kingdom:
UK - PMI index for the manufacturing sector (09:30 GMT).
US - index of business activity in the manufacturing sector (14:45 GMT).
US - ISM manufacturing index (15:00 GMT).
On February 1, the UK, as well as in the US and the EU, will release a report on business activity in the manufacturing sector. The forecast is above 50.
COT (Commitments of Traders) report:
The latest COT report from January 26 showed quite significant changes. To begin with, speculators, as the most important category of traders, dramatically changed their mindset and began to increase short contracts. More than 6 thousand of them were opened. But 2.5 thousand Long contracts were also opened. Thus, I can conclude that the mood of the "Non-commercial" category has become more "bearish", therefore, the probability of a fall in the British dollar quotes in the near future is growing. Thus, if the level of 1.3744 is not overcome, then the chances of a fall in the British dollar will increase sharply. In the meantime, speculators can accumulate short positions.
Forecast for GBP/USD and recommendations for traders:
It is recommended to make new purchases of the British dollar when closing above the level of 1.3744 on the hourly chart with a target of 1.3820. It is recommended to sell the pound sterling when closing quotes under the trend line on the 4-hour chart with targets of 1.3625 and 1.3570.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to support 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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