GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair on Tuesday first performed a fall under the level of 100.0% (1.3800), after which a reversal in favor of the British and new strong growth with a close above the level of 1.3800 and 1.3859. Thus, the process of price growth can be continued in the direction of the corrective level of 76.4% (1.3906), and closing above it will lead to an increase in the direction of the Fibo level of 61.8% (1.3972). Last week, traders were actively buying the British, although the information background these days was relatively poor. At first, the British fell by 250 points and then immediately began to grow, which is already about 300 points. If these movements were connected with the information background, it would be clear and understandable. However, how could we expect strong growth of the British dollar if there is no economic news from the UK? The situation with the coronavirus in the country is improving. However, it is unlikely that such a strong growth was associated with this.
At this rate, the pound/dollar pair will reach annual highs. In addition, everything is not very good in Britain right now. Brexit continues to play a significant role in the economy. Recently, the Northern Ireland Protocol, which London wants to revise, has been discussed. And if it does not work out to revise it, then go for its open violation. Of course, these thoughts are not voiced aloud by representatives of the British government. However, this is clear to everyone. The European Union, in turn, stands firmly on its own and does not want to completely revise the protocol, which is part of the Brexit deal. Perhaps Brussels is ready to revise some points but not the entire protocol, which Boris Johnson and his entourage want. Thus, another conflict situation is brewing, negotiations on which can drag on for years. Today, traders can react to Jerome Powell's speech. However, the pound/dollar pair is not driven by economic statistics or data from central banks right now.
GBP/USD – 4H.
The GBP/USD pair on the 4-hour chart increased to the corrective level of 23.6% (1.3870) and closed above it. The 4-hour chart shows that the quotes have begun returning to the highs of the year near the level of 1.4240. If you zoom out the chart, you can see that the pair has spent the last five months between the levels of 1.3640 and 1.4240, alternately turning around these levels. Thus, I would assume that the growth of the British dollar will continue in the direction of 1.4240.
Overview of fundamentals:
On Tuesday, the calendar of economic events in the UK did not contain a single entry. In the US, a report on orders for durable goods was released. However, it is hardly possible to draw a parallel between it and the new fall in the dollar. Thus, the information background was weak.
News calendar for the USA and the UK:
US - FOMC decision on the main interest rate (18:00 UTC).
US - accompanying FOMC statement (18:00 UTC).
US - FOMC press conference (18:30 UTC).
On Wednesday, the calendar of economic events in the UK is empty again. In the US – the Fed meeting, its results, and Powell's speech. Thus, the information background will be very strong today.
COT (Commitments of Traders) report:
The latest COT report on July 20 for the British showed that the mood of major players continues to become more "bearish." In the reporting week, speculators increased 11,642 short contracts and got rid of 1,157 long contracts. The total number of contracts among all categories of traders is already almost the same – 182 thousand each. The number of short contracts in the "Non-commercial" category of traders is already higher than long. Thus, judging by the COT reports, there is a global trend change for the British dollar. However, the British dollar itself is not too eager to go down, but at the same time, it retains the chances of falling to the corrective level of 1.3513 (100.0% on the daily chart).
GBP/USD forecast and recommendations for traders:
Today, I recommend buying the British if there is a rebound from 1.3859 with the targets of 1.3906 and 1.3972 on the hourly chart. I recommend selling the pound if a close is made under the level of 1.3859 on the hourly chart with a target of 1.3800.
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 ensure current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.
