GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair rebounded from the corrective level of 50.0% (1.3839), a reversal in favor of the British dollar, and began to grow in the direction of the corrective level of 23.6% (1.3928). The rebound of quotes from this level will work in favor of the US currency and the resumption of the fall in the direction of the level of 50.0% (1.3839). Meanwhile, UK economists are starting to panic about tomorrow's Scottish parliamentary elections. Representatives of major banks in the UK and beyond note that risks to the economy and the pound are growing, although the markets are not in a hurry to take them seriously and hedge them. By and large, all the economists surveyed say that everything will depend on the election results. If the parties that insist on an independence referendum win the necessary number of votes (which is likely to happen), then the risks to the British economy and the pound will increase. Experts note that the current calm of the markets may be replaced by panic when the elections in Scotland become known. Many predict huge and severe consequences, both for England and Scotland. In this case, Scotland wants to return to the European Union. However, it will have to share common debts with Britain, choose which currency it will use and what kind of relations it will have with the rest of the Kingdom. Experts also note that Scotland means much more to the UK than the European Union since the first union dates back more than 300 years, while the British were connected to the European Union for only 50 years. Thus, a Scottish exit could have more devastating consequences for Britain than Brexit.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair also performed a reversal in favor of the British dollar. They closed above the corrective level of 23.6% (1.3870) after forming a bullish divergence at the CCI indicator. Thus, the growth process can be continued in the direction of the level of 1.4003, but in general, the graphical picture does not look very accurate. The most clear picture looks on the daily chart, which I recommend you to pay attention to.
GBP/USD – Daily.
On the daily chart, the pair's quotes have returned to the ascending trend line, and at this time, it is decided what will happen: a rebound or a close below. In the first case, the upward trend will continue. In the second - the chances of continuing to fall in quotes will increase. The daily chart now most accurately describes the picture of what is happening.
GBP/USD – Weekly.
The pound/dollar pair completed a close over the second downward trend line on the weekly chart. Thus, the chances of long-term growth of the pound remain.
Overview of fundamentals:
There were no major economic reports in the UK and US on Tuesday. However, the speech of US Treasury Secretary Janet Yellen briefly affected the pound/dollar pair and allowed the US currency to grow slightly.
News calendar for the United States and the United Kingdom:
US - change in the number of employees from ADP (12:15 UTC).
US - ISM service sector PMI (14:00 UTC).
On Wednesday, the UK calendar is again empty. There will be two fairly important reports in the US, which I recommend that traders pay attention to.
COT (Commitments of Traders) report:
The latest COT report from April 27 on the British dollar showed that the mood of speculators again became a little more "bullish." Although this time, it was about closing contracts, not opening them. The number of long contracts was reduced by 1,168, and the number of short contracts - by 5,008. Thus, the gap between the total number of long and short contracts in the category of "Non-commercial" traders has increased. It increases the likelihood of new growth in the British dollar. However, the upward trend line on the daily chart is now of key importance for its prospects.
GBP/USD forecast and recommendations for traders:
The situation is confusing right now. I recommend buying the British dollar with a target of 1.4084 if there is a rebound from the trend line on the daily chart. I recommend selling the pound if a close is made under the trend line on the daily chart with a target of 1.3513.
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.
