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GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair quotes fell to the corrective level of 127.2% (1.4064) yesterday and closed below it. Thus, the fall of quotes can be continued in the direction of the next corrective level of 100.0% (1.4008). However, other charts indicate a very likely resumption of the growth of quotes. Yesterday, the information background for the pound/dollar pair was also only in the US inflation report. At least, all the other reports were practically not interesting to traders. For example, it turned out that the British economy shrank by 1.5% in the first quarter. It seems that traders expected exactly such results. In the first quarter, the European economy lost 0.6%, and the American economy grew by 6.4%. Thus, the United States is ahead of the entire planet. The real competition for it is China. But back to the British statistics. Industrial production increased by 1.8% m/m in March, and GDP also grew separately in March – by 2.1%. However, the more important value is the quarterly value, so the March positive does not play a significant role. In general, traders have not reacted in any way to all these reports on GDP and production. At the same time, the British dollar remained very high until the release of the inflation report. The higher charts show that the pair remains bullish. Thus, the drop may be short-lived.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair closed above the level of 1.4003, but at this time began the process of falling. A bullish divergence was formed at the CCI indicator, which now allows us to count on a reversal in favor of the British dollar and the resumption of the growth process in the direction of the corrective level of 0.0% (1.4240). Closing under the low of this divergence or the level of 1.4003 will significantly increase the probability of a further fall in the direction of the next corrective level of 23.6% (1.3870).
GBP/USD – Daily.
On the daily chart, the picture is the most clear and accurate. Everything rests on the trend line, along which the movement of quotes of the pound/dollar pair continues. Closing the exchange rate under this line will favor the US currency and the beginning of the fall of quotes in the direction of the corrective level of 100.0% (1.3513). Until this happens, the growth process will continue at the corrective level of 161.8% (1.4812).
GBP/USD – Weekly.
The pound/dollar pair completed a close over the second downward trend line on the weekly chart. Thus, the chances of long-term growth of the pound remain.
Overview of fundamentals:
On Wednesday, many important and interesting reports in the UK did not interest traders at all. The biggest impact on the pair was the report on inflation in the United States.
News calendar for the United States and the United Kingdom:
US - number of initial applications for unemployment benefits (12:30 UTC).
US - producer price index (12:30 UTC).
UK - Bank of England Governor Andrew Bailey will deliver a speech (16:00 UTC).
On Thursday, the calendar of economic events in the UK again shows the speech of Andrew Bailey, and in the US - two rather weak reports. The information background is likely to be weak today.
COT (Commitments of Traders) report:
The latest COT report from May 4 on the British dollar showed that speculators' "bullish" mood has become much weaker. And this is although the British dollar continues to grow, which is best seen on the daily chart. However, the "Non-commercial" category of traders closed 7,628 long contracts and opened almost 2,000 short contracts during the reporting period. Thus, the mood of speculators has become much more "bearish." However, based on the movement of the Briton, we can conclude that this is a simple accident. The trend cannot be maintained upward if the most important category of traders does not buy the pair.
GBP/USD forecast and recommendations for traders:
It was recommended to buy the British dollar with a target of 1.4084 if there is a rebound from the trend line on the daily chart. At this time, this position should be kept open with a target of 1.4240. I recommend selling the pound if a close is made under the trend line on the daily chart with a target of 1.3513.
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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