GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair performed a rebound from the corrective level of 200.0% (1.4216) and since then continue the process of falling in the direction of the ascending trend line, which still keeps the current mood of most traders "bullish." The rebound of quotes from this line may work in favor of the British dollar, and traders can count on new growth of the pair in the direction of the levels of 1.4136 and 1.4216. However, the closing of quotes under the trend line will allow us to expect a further drop in the pair's quotes in the direction of the level of 1.4008. Yesterday, for most of the day, the British dollar was declining. I can't say that this was definitely due to the report on British inflation. The indicator increased from 0.7% to 1.5% y/y. Core inflation also rose from 1.1% to 1.3%. However, the Briton still fell, and this is due to technical reasons. On the older charts, it is visible that the upward trend has been going on for a long time, and there should be at least pullbacks from time to time. Most likely, this is exactly the kind of pullback that started yesterday. Bull traders failed to take the level of 1.4216, so the further growth of the British currency has been put aside for now. The movement of the pound/dollar pair was also influenced by the evening minutes of the Federal Reserve, during which traders saw hints of possible curtailment of the stimulus program. I believe that no new information was contained in the minutes. However, traders waited so long for the Fed's hints to reduce the asset purchase program. They are worried that inflation would continue to grow uncontrollably. As a result, the upward trend persists, and the upward trend lines will have to keep the pair in an upward trend in the coming days.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a reversal in favor of the US currency after forming a bearish divergence at the MACD indicator. The process of falling in the direction of the level of 1.4003 has begun, which at the moment passes inside the upward trend corridor, which keeps the mood of traders "bullish." So far, there is no talk of changing the trend.
GBP/USD – Daily.
On the daily chart, everything still rests on the trend line, along which the movement of the pound/dollar pair quotes continues. Closing the rate under this line will work in favor of the US currency and the beginning of the fall in the direction of the corrective level of 100.0% (1.3513). Until this happens, the growth process will continue at the corrective level of 161.8% (1.4812).
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:
On Wednesday, the UK released an inflation report, and in the US - the minutes from the Fed. The information background of the previous day was average in strength.
News calendar for the United States and the United Kingdom:
US - number of initial applications for unemployment benefits (12:30 UTC).
On Thursday, the calendar of economic events in the UK is empty, and in the US, the information background will be very weak.
COT (Commitments of Traders) report:
The COT report of May 4 on the British dollar showed that speculators' "bullish" mood has become much weaker. But the latest report of May 11 showed a sharp increase in long contracts in the category of "Non-commercial" traders. Their number increased by 15,059, while the number of short contracts increased by only 6,058. Thus, the mood of speculators has again become more "bullish," which further improves the prospects for the British dollar. As you can see, the COT reports on the European and British currencies support the further growth of these currencies.
GBP/USD forecast and recommendations for traders:
It is recommended to buy the British dollar with the targets of 1.4216 and 1.4240 if a new rebound is made from the trend line on the hourly chart or from the trend line on the 4-hour chart. I recommend selling the pound if a close is made under the ascending trend line on the hourly chart with the targets of 1.4008 and 1.3959.
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.
