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GBP/USD – 1H.
Hello, traders! According to the hourly chart, the pound/dollar pair performed a reversal in favor of the English currency and began the growth, which allowed it to consolidate over the downward trend corridor. Thus, the mood of traders is now characterized as "bullish" and further growth of the pair is expected in the direction of the goals of the 4-hour chart. The information background for the British pound was extremely negative last week. Especially when it became known about the failure in negotiations between Brussels and London on an agreement on life after Brexit. However, the beginning of a new week remains entirely on the competitors of the US dollar, as I said, because of political squabbles in America, which hinder the assistance to the American economy, which is experiencing the strongest negative impact from the epidemic of the coronavirus, quarantine, and the general crisis. Thus, the pound has received support that is likely to be short-term. The UK now has an enormous number of its own problems, which cannot but affect the strength of the British pound.
GBP/USD – 4H.
On the 4-hour chart, the pound/dollar pair, after fixing under the side corridor, unexpectedly performed a rebound from the first corrective level of 38.2% (1.2095) that came its way and turned in favor of the English currency. Thus, the growth has now begun, probably caused by the information background from America, with the goal of a corrective level of 50.0% (1.2303). Today, the divergence is not observed in any indicator. A rebound of the pair's exchange rate from the Fibo level of 50.0% will work in favor of the US currency and resume the fall in the direction of the corrective level of 38.2%.
GBP/USD – Daily.
On the daily chart, the pair's quotes performed a consolidation under the corrective level of 38.2% (1.2215), however, by the end of today, they can perform a reversal in favor of the English currency and close above this level. In this case, the growth will continue in the direction of the Fibo level of 50.0% (1.2463).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair performed a false breakdown of the lower trend line. Thus, until the pair's quotes are fixed under this line, there is a high probability of growth in the direction of the top two trend lines, but in the long term.
Overview of fundamentals:
On Monday, the UK and US economic calendar were completely empty.
News calendar for the US and UK:
UK - change in the number of applications for unemployment benefits (08:00 GMT).
UK - unemployment rate (08:00 GMT).
UK - change in average earnings (08:00 GMT).
US - Federal Reserve Board of Governors Chairman Jerome Powell will deliver a speech (16:00 GMT).
On May 19, the UK has already released reports on unemployment and wages. It turned out that the number of applications for benefits in the UK increased in April by 856 thousand (the value of March - 12.1 thousand), the unemployment rate in March fell from 4% to 3.9%, wages increased by 2.4% and 2.7%. Since only data on benefit requests were related to April, I believe that this is what traders should have taken into account. However, given how the pound continues to grow, it seems that traders did not pay any attention to this news.
COT (Commitments of Traders) report:
The latest COT report showed that professional market players have started to increase their positions on the British pound. This applies to both long and short contracts. Their number in the hands of speculators increased by 3,844 and 4,539 during the reporting week. Thus, there was a greater increase in short-contracts and a greater number of speculators also had short-contracts. The total number of contracts among all major market participants remains in favor of long, but the advantage is not too great. More important is the number of short contracts in the hands of speculators and they have an advantage over deals to sell the British pound. Based on this, we can conclude that the position of the British currency continues to deteriorate, more and more professional traders are trying to get rid of this currency.
Forecast for GBP/USD and recommendations to traders:
I recommend making new sales of the British currency in the current conditions after the rebound of quotes from the Fibo level of 50.0% (1.2303) with the goal of 1.2095. I recommend buying the English currency after fixing the pair above the level of 1.2303 with the goal of 1.2516.
Terms:
"Non-commercial" - major 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 to ensure 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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