GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair performed a reversal in favor of the British currency on Wednesday after rebounding from the level of 1.3600 and performed a significant increase. During the day, the pair's quotes also closed above the Fibo level of 127.2% (1.3679), allowing traders to count on continued growth in the direction of the level of 1.3741. The rebound of quotes from this level will work in favor of the US currency, and some fall in the direction of the level of 127.2%. Fixing the exchange rate above 1.3741 will increase the chances of further growth in the direction of the corrective level of 100.0% (1.3800). The information background of the first three days of the current week remains extremely weak. News from the UK came only concerning the pandemic, as well as Brexit. There was no news from the USA at all. On the issue of the pandemic, everything remains very difficult for Britain. The number of cases of the disease has stopped growing but remains at very high values.
The British government is criticized for the complete abolition of all quarantine restrictions. The day before yesterday, an anti-record was set for the last few months regarding the number of deaths from coronavirus per day (more than 100 people). Britain is also not doing well in its relations with the European Union. Minister David Frost, who is responsible for all negotiations on the UK's withdrawal from the EU, has published a 28-page document outlining the main points that Britain would like to change in the so-called Northern Ireland protocol. Frost proposes the following:
- Cancel all customs checks for goods that are imported into Northern Ireland from the rest of the UK.
- Abandon the enforcement of the protocol by European institutions.
- Allow goods to circulate freely within Northern Ireland without any restrictions.
- Create new rules for suppliers and all participants in the food market.
According to David Frost, the protocol in Northern Ireland is not perfect and hinders relations between the EU and the UK.
GBP/USD – 4H.
The GBP/USD pair on the 4-hour chart performed a reversal in favor of the British and consolidated above the retracement level of 38.2% (1.3642). Thus, the growth process can be continued towards the next corrective level of 23.6% (1.3870). Bearish divergence is emerging for the CCI indicator. However, the pound/dollar pair is now highly dependent on the information background and can ignore many graphical signals. At the moment, I am seeing a rapid recovery of the British after a three-day fall.
Overview of fundamentals:
On Wednesday, the calendar of economic events in the UK was empty, and there was no important news in the US either. Thus, the information background did not have any impact on traders.
News calendar for the USA and the UK:
US - number of initial and repeated applications for unemployment benefits ( 12:30 UTC).
On Thursday, the calendar of economic events in the UK is again empty, and in the US – only one report will be released, which is unlikely to interest traders. Thus, the information background will still be absent today. However, the British can continue to trade very actively.
COT (Commitments of Traders) report:
The latest report of the central bank on July 13 for the British showed that the mood of the major players is again becoming more "bearish." During the reporting week, speculators increased 1,729 short contracts and got rid of 8,054 long contracts. Thus, the "bullish" mood of the "Non-commercial" category of traders has weakened again. Over the past four weeks, both for the euro and for the pound, the mood of traders has become more "bearish." However, the changes in the British are still less pronounced. However, it is for the British that the number of long and short contracts in the hands of speculators is already almost the same. Thus, it is already possible to talk about the lack of an advantage for bull traders.
GBP/USD forecast and recommendations for traders:
Yesterday, it was recommended to buy the British dollar with a target of 1.3679 if the pair performs a rebound from the level of 1.3600 on the hourly chart. Since the price has closed above the level of 1.3679, purchases should be held with a target of 1.3741. If this level is also overcome – then with the target of 1.3800. It is recommended to sell the pound if there is a rebound from the level of 1.3741 on the hourly chart with targets of 1.3679 and 1.3600.
"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 ensure current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.