GBP/USD – 1H.
Hello, dear traders! According to the hourly chart, GBP/USD rebounded from 1.3698 - the 261.8% retracement level - on January 4. Then, it fell below 1.3618. At the moment, the quotes are heading to 1.3499 - the 200.0% Fibonacci retracementl evel. Yesterday, Prime Minister Boris Johnson announced a new lockdown in the UK, which is going to last for at least 6 weeks. According to quarantine restrictions, schools will be closed and people will be allowed to leave their houses only once a day. At the same time, the UK began rolling out vaccine against Covid-19. Nevertheless, the country remains Europe's hotspot new for coronavirus cases, leaving behind France, Italy and Spain. The daily increase in COVID-19 cases in these countries is above 20,000. In the UK, this number approaches 60,000 per day. Thus, a mass vaccination programme adds optimism. However, the UK is still suffering the most from the deadly virus. During the first wave of the pandemic, the death toll in the UK was the highest. Today, it is the third national lockdown in the country and the number of infections climbs to another record. All these factors have an adverse impact on the British economy. Notably, the pound sterling is still moving in an uptrend.
GBP/USD – 4H.
On the 4-hour chart, GBP/USD climbed to 1.3701- the 127.2% retracement level - and rebounded from it. Thus, the price started moving downward to 1.3481 - the 100.0% retracement level. None of the indicators has shown any signs of divergency today. A rebound from the 100.0% retracement level is likely to boost the pound sterling. The price may resume its upward movement to 1.3701.
GBP/USD – Daily.
On the daily chart, the quotes consolidated above 1.3513 - the 100.0% retracement level. The price may extend its bullish movement to 1.4084 - the 127.2% retracement level.
GBP/USD – Weekly.
Round-up:
On Monday, no significant reports were published in both the UK and the US. The information background was not strong. Only the news about the introduction of a third lockdown in the UK brought the pound under pressure.
Macroeconomic calendar for US and UK:
The US will deliver its ISM manufacturing index at 15:00 GMT.
On January 5, the macroeconomic calendar in the UK and the US is almost empty. Mainly, traders will be focused on the COVID-19 situation in the UK.
Commitments of traders report (COT):
The COT report from December 29 showed that speculators decreased slightly the number of both Long and Short contracts. Non-commercial traders closed around 1,640 of Long contracts and 296 of Short contracts. Thus, bearish sentiment improved. The total number of contracts per trader does not indicate that the bullish trend will continue. The number of Long contracts remains on a high level. Since October, this correlation has changed dramatically. As of October 1, the number of Long and Short contracts was 35,000 and 52, respectively. Over the past three months, the sentiment of large traders have become more bullish.
Forecast for GBP/USD:
Today, one should consider buying the pound if the price closes above 1.3618 with the target at 1.3698 on the hourly chart. One should consider selling the pound if the price rebounds from 1.3618 on the hourly chart. In this cast the target is seen at 1.3499. The price has already closed below the trend line.
Definitions:
"Non-commercials" are major market players such as banks, hedge funds, investment funds, private and large investors.
"Commercials" are commercial enterprises, firms, banks, corporations, and companies that buy currency not to obtain 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.
