GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair continued the growth process on Wednesday, which has been maintained for more than a week. The pair closed above the corrective level of 50.0% (1.3910) this morning. Thus, traders can count on continued growth in the direction of the next Fibo level of 61.8% (1.3990). The rebound of the pair's exchange rate from this level will work in favor of the American and the beginning of a fall in the direction of the level of 1.3910. In general, the British pound received the same support as the euro yesterday. Based on Jerome Powell's generally bland statements about the Fed's monetary policy. However, the pound has been growing for almost two weeks without the Fed meeting. It is not stopped by any rather dubious news on disagreements between the EU and the UK regarding Brexit and the Northern Ireland Protocol. Thus, at this time, the growth of the British does not look quite logical.
Nevertheless, it should be recognized that the epidemiological situation in Britain continues to improve, which means that Boris Johnson was right when he completely canceled quarantine measures on July 19. The economy began to recover faster, and the fourth wave was stopped quite quickly due to the high vaccination rates. Also, good news came from the European Union: the European Commission decided to suspend proceedings on two lawsuits against London temporarily. According to the EC representatives, Brussels wants constructive dialogue with London. The lawsuits were filed after the UK unilaterally violated several points of the Northern Ireland Protocol. And although there is now a complete lack of mutual understanding between the parties on this issue, it is still clear that both sides are trying to get out of this situation amicably and not through the courts. However, at the same time, the European Union is not going to blindly follow the calls of Boris Johnson, who wants to revise the protocol completely. At the same time, Brussels said that they are ready to consider any proposals from London carefully. It seems that the parties are at the very beginning of a new long negotiation process.
GBP/USD – 4H.
The GBP/USD pair on the 4-hour chart performed a consolidation above the corrective level of 23.6% (1.3870). Thus, the growth process can be continued towards the next level of 1.4003. Closing the pair's rate above will further increase the probability of continuing growth in the direction of the corrective level of 1.4240, which is now seen as the maximum target for bull traders. A rebound from the level of 1.4003 will favor the American and some drop in quotes.
Overview of fundamentals:
On Wednesday, the calendar of economic events in the UK did not contain a single entry. However, the British dollar continued to show growth without this, and in the evening, after summing up the results of the Fed meeting, it continued. Thus, the information background was strong yesterday.
News calendar for the USA and the UK:
US - change in GDP volume for the quarter (12:30 UTC).
US - number of initial applications for unemployment benefits (12:30 UTC).
On Thursday, the calendar of economic events in the UK is empty again. In the US, a fairly important GDP report will be released in the second quarter. Thus, after lunch, a sharp reversal in favor of the US dollar is possible, or a continuation of growth if the report turns out to be weak.
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, you should stay in the purchases of the American, as the closing was made above the level of 1.3910 on the hourly chart with the targets of 1.3990 and 1.4003 on the hourly chart. I recommend selling the pound if there is a rebound from 1.4003 on the 4-hour chart with a target of 1.3910.
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.
