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GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair performed a drop to the level of 1.3570 during the past day, a rebound from it, a reversal in favor of the British currency, and a sharp increase of 140 points within just two hours to the level of 1.3698. The pair's quotes also performed a close over the downward trend corridor, which changed the current mood of traders to "bullish". The Bank of England did not make any important decisions during its meeting. And the tone of the final summary on monetary policy can be interpreted as you like. The Bank of England did not change the key rate, did not change the size of the asset purchase program, and at the vote of its members, no one voted in favor of changing the parameters of monetary policy. However, the final summary said that the key rate will not be lowered in the next six months. There was no clear statement at all that "the rate will not be lowered".
It said that commercial banks will need 6 months to prepare for a negative rate. The fact that the forecasts for the economy remain very uncertain since the issue of the pandemic is still acute. Especially for the UK, where the third "lockdown" continues. The Bank of England also expects minimal GDP growth in the fourth quarter and a 4% contraction in the first quarter. He lowered the forecasts for this indicator for 2021. All other statements were "standard". The regulator will, as before, strive for 2% inflation and keep a "finger on the pulse" to quickly respond to any changes in the economy. Also, the regulator is not going to tighten monetary policy in the near future. Thus, the growth of the British dollar this time may be very limited, as the hint of not introducing a negative rate in the coming months is unlikely to be a support factor for the British dollar for a long time.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a fall to the lower border of the side corridor indicated by the blue rectangle and even closed below it. But the events of yesterday returned the interest of traders to the British dollar, which eventually resumed the growth process within this corridor. Now the pair may aim for the upper limit of the corridor, however, a second close under it will increase the probability of a new fall in the British currency quotes 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 Thursday, only the results of the Bank of England meeting were summed up in the UK. Against the background of this event, all the other reports had no meaning.
US and UK news calendar:
UK - Bank of England Governor Andrew Bailey will deliver a speech (12:15 GMT).
US - unemployment rate (13:30 GMT).
US - change in the number of people employed in the non-agricultural sector (13:30 GMT).
US - change in the average hourly wage (13:30 GMT).
On February 5, the results of the Bank of England meeting will be summed up in the UK, and this is the main event of the day, which is very important for the prospects of the Briton.
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 dramatically. 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 at the rebound of quotes from the level of 1.3744 on the hourly chart with targets of 1.3698 and 1.3625 or at a new close under the level of 1.3625 with targets of 1.3570 and 1.3522.
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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