GBP/USD – 1H.
Good afternoon everyone! On the hourly chart, the GBP/USD pair reversed helping the pound sterling to gain ground and resumed its upward movement. Later, it consolidated above the downward trend line and the correction level of 100.0% - 1.3625. Thus, the overall sentiment is now bullish. The pair may reach the levels of 1.3698-1.3744 and above. The rally of the pound sterling was mostly due to the speech of Governor of Bank of England Andrew Bailey. Mr. Bailey said the Bank of England was not about to push interest rates below zero in the near future as there were a lot of problems with them. Traders immediately priced in these comments in the quotes. For the last week, the British currency has been mostly falling. Currently, it is ready to resume the upward movement. It is still unclear whether the current rally will be short-lived or not. However, if the pair hits the level of 1.3700, it will be a good sign. Last time it failed to break above this level. If it consolidates above this level, it will increase the probability of upward movement. However, do not forget that the third lockdown is now in full swing in the UK, and the epidemiological situation is not improving. Thus, if the pair rebounds from the 1.3700 level, it is likely to return to the downward movement.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD rose to the correction level of 127.2% - 1.3701. The rebound of the pair's quotes from this level could help the US currency advance. The pair will fall to the correction level of 100.0% - 1.3481. If it consolidates above the level of 127.2%, it may jump to the next correction level of 161.8% - 1.3977. Today, on the chart, there is no divergence.
GBP/USD – Daily.
On the daily chart, the pair consolidated above the correction level of 100.0% - 1.3513. Thus, it may approach the Fibonacci level of 127.2% - 1.4084. If it declines below the level of 100.0%, it may sink even lower.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair consolidated above the second downtrend line. Thus, the chances of long-term growth of the pound sterling significantly increased.
There were no important economic reports from the UK and the US on Tuesday. However, the speech of Andrew Bailey was in the spotlight. The pound sterling was trading buoyantly.
US-Consumer Price Index (13-30 GMT).
On January 13, the US will unveil inflation data.
COT report (Commitments of traders):
COT report (Commitments of traders):
The latest COT report from January 5 showed the same low activity of major players. During the New Year's week, the non-commercial traders opened 1,028 long deals and 1,111 short ones. That is, almost an equal number. Therefore, I cannot conclude that during the reporting week, the mood of speculators became more bullish or more bearish. Judging by the total number of open deals, the sentiment remains more bullish. However, on December 1, the situation was exactly the opposite but the pound sterling was growing even then. In general, there are no significant changes in the mood of major players.
Forecast for GBP/USD and recommendations:
It is recommended to open long deals on the pound sterling now at the close of quotes above the level of 127.2% - 1.3701 on the 4-hour chart with targets of 1.3744 and 1.3820. It is recommended to open short deals on the pound sterling when the quotes edge lower from the level of 1.3701 on the 4-hour chart with targets of 1.3625 and 1.3522.
"Non-commercial" - large market players: banks, hedge funds, investment funds, private, big investors.
"Commercial" - commercial enterprises, banks, companies that buy currency not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders whose activity does not have a significant impact on the price.