According to the hourly chart, the GBP/USD pair performed a reversal in favor of the US currency and began the process of falling toward the level of 1.1480. The rebound of quotes from this level will work in favor of the British and the resumption of growth in the direction of the level of 1.1684. Closing the pair’s rate at 1.1480 will increase the chances of continuing the fall in the direction of the Fibo level of 423.6% (1.1304).
I want to note right away that yesterday’s fall of the British was quite weak. Traders are waiting for a more important meeting of the Fed, as well as a meeting of the Bank of England more suitable for the pound, which will be held next week. Given that both central banks are likely to raise their interest rates, I cannot give preference to either the dollar or the pound right now. If we proceed from the graphic picture, then the growth of the British has a higher priority now. On the 4-hour chart, a closure was made over a descending trend corridor. However, the situation next week may force traders to consider trading in any direction. After all, there is no certainty that both central banks will raise their rates by 0.75%.
The Bank of England may decide to increase by 1.00%. Although now the probability of such a scenario is not the highest, it cannot be excluded. In this case, the British dollar may show a sharp increase, since now traders do not expect tightening by more than 0.75%. The Fed may raise the rate by 0.50%, although most expect a rise of 0.75%. Nevertheless, several FOMC members have already said last week that it is time for the regulator to start discussing slowing down the pace of tightening the PEPP. Therefore, such a conversation may take place as early as next week. Therefore, surprises are possible, and it is better to sum up the results after both meetings.
On the 4-hour chart, the pair performed a new reversal in favor of the British, canceled the “bearish” divergence, and secured above the level of 1.1496. Thus, the growth process can be continued in the direction of the Fibo level of 161.8% (1.1709). A rebound from this level will work in favor of the US currency and some fall. But the key factors of the pair’s growth now are the rebound from the level of 1.1111 and consolidation above the downward trend corridor.
Commitments of Traders (COT) Report:
The mood of the “Non-commercial” category of traders over the past week has become more “bearish” than a week earlier. The number of long contracts in the hands of speculators decreased by 8,651 units, and the number of short contracts increased by 3,390. But the general mood of the major players remains the same – “bearish,” and the number of short contracts is still very much higher than the number of long contracts. Thus, in general, large traders continue to mostly remain in the sales of the pound and their mood is gradually changing towards the “bullish” in recent months, but this process is too slow and long. The pound can continue to grow only if there is a strong (for itself) information background, with which obvious problems have been observed in recent months. I draw attention to the fact that the mood of speculators on the euro has long been “bullish”, but the European currency is still not popular among traders. And for the pound, even COT reports do not give grounds to buy it.
News calendar for the USA and the UK:
US – consumer sentiment index from the University of Michigan (14:00 UTC).
On Friday in the UK, the calendar of economic events does not contain anything interesting, but in the US there will be only one report that is unlikely to interest traders. The influence of the information background on the mood of traders today will be very weak or absent.
GBP/USD forecast and recommendations to traders:
I recommend selling the British in case of a rebound from the level of 1.1709 on the 4-hour chart with a target of 1.1496. You can buy the British dollar with a target of 1.1709 if the rebound from the level of 1.1496 is performed on the 4-hour chart.
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