GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair fell by 100 points on Friday, after which they turned in favor of the British dollar and resumed the growth process in the direction of the corrective level of 127.2% (1.3744). A new ascending trend line has been constructed, which also characterizes the current mood of traders as "bullish". Fixing the pair's rate above the level of 127.2% will increase the probability of continued growth of quotes. Meanwhile, while the Briton is breaking all the records of its own high cost, more economists and analysts are wondering about the state of the British economy at this time. Recall that so far it is the UK that remains the only developed country in which the third "lockdown" is already operating. It is no secret that every "lockdown" deals a blow to any economy. Of course, now that the whole world has been living in a pandemic for a year and has somehow adapted to it, quarantine does less harm. But it still does. Thus, many GDP forecasts for the fourth quarter of 2020 and the first quarter of 2021 are already negative. Moreover, the World Bank and the IMF are also lowering their forecasts for global economic growth for 2021. However, we are still talking about growth, and in Britain - about a reduction for two quarters. This has already been mentioned by the Governor of the Bank of England, Andrew Bailey, so this is not an empty expectation of traders. Nevertheless, the pound continues to grow.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair completed a new close above the corrective level of 127.2% (1.3701), which increases the probability of further growth in the direction of the next Fibo level of 161.8% (1.3977). Today, the divergence is not observed in any indicator. The chances of growth for the British remain very high.
GBP/USD – Daily.
On the daily chart, the pair's quotes performed a consolidation above the corrective level of 100.0% (1.3513), and then rebound from it. Thus, the growth process can be continued in the direction of the Fibo level of 127.2% (1.4084).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair completed a close over the second downward trend line. Thus, the chances of long-term growth of the pound are significantly increased.
Overview of fundamentals:
On Friday, the UK released reports on retail trade (much worse than traders' expectations), as well as on business activity. In the service sector, activity fell quite seriously, so in general, the news on this day was not on the side of the Briton.
US and UK news calendar:
UK - Bank of England Governor Andrew Bailey will deliver a speech (17:00 GMT).
On January 25, the UK will host a speech by the Governor of the Bank of England, Andrew Bailey, who can again talk about the weakness of the economy at this time. There won't be anything interesting in America today.
COT (Commitments of Traders) report:
The latest COT report from January 19 showed not too big changes in the mood of major traders. The most interesting category of "Non-commercial" traders for the reporting period reduced 2,020 long contracts and 3,105 short contracts. Thus, it can even be said that the mood of speculators has become more "bullish". However, it again went on the reduction in the number of contracts and not on their capacity. Now the pound is growing and has been growing for a long time and this is even more alarming, given the problems of the British economy. However, based only on the COT report, so far we can only conclude that the growth of the British dollar can continue.
GBP/USD forecast and recommendations for traders:
I recommend making new purchases of the British dollar at a new rebound from the trend line on the hourly chart or at a close above the level of 1.3698 with targets of 1.3744 and 1.3820. It is recommended to sell the pound when closing under the trend line on the hourly chart with the targets of 1.3625 and 1.3522.
Terms:
"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 support current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
