GBP/USD – 1H.
Greetings! On the 1H chart, the GBP/USD pair performed two rebounds during Tuesday from the correction level of 50.0% - 1.3792 on the lower Fibo grid. The pair declined to the level of 23.6% - 1.3731 on the higher Fibo grid. The quotes also fell to the ascending trend line. It indicates that bullish sentiment is still strong. However, if the pair closes below the trend line and the level of 1.3731, the US currency may assert strength. Thus, the pair will fall to the levels of 1.3692 and 1.3602. Yesterday, the economic calendar for the UK did not contain important macroeconomic reports but this did not prevent traders from getting rid of the pound sterling quite actively. On Tuesday, the UK unveiled the M4 money supply data, applications for mortgage loans, the volume of lending to individuals, and the retail price index. The British currency hardly stumbled because of those reports.
The US did not release any data that could spur the US dollar's growth, the euro/dollar pair in particular. I believe that the greenback rose yesterday thanks to technical indicators. So, bulls need to consolidate above the trend line. Otherwise, the US currency may continue to grow. Today, the UK Manufacturing PMI index is on tap. The US is going to unveil the same data. Apart from that, traders are anticipating ADP Employment Change data and the ISM Manufacturing Index. The last two reports are sure to impact the market as they may provide some clues about the state of the US economy for investors. For instance, the Fed will take into account the results of the ADP report when making a decision on the reduction of the bond-buying program. QE program. On Friday. traders will finally digest Nonfarm Payrolls data. However, today, the attention of traders will be focused on the ISM Manufacturing Index and ADP data.
GBP/USD – 4H.
The GBP/USD pair performed a new reversal on the 4H chart and returned to the correction level of 23.6% - 1.3730. The rebound from this level helped the pound sterling reach the correction level of 38.2% - 1.3829 on the lower Fibo grid. Consolidation of the pair below the level of 1.3730 may lead to a fall to the level of 1.3642. There are no divergences on any charts today.
Economic calendar for US and US:
UK- Manufacturing PMI (08-30 UTC).
US - ADP Employment Change (12-15 UTC).
US – ISM Manufacturing Index (14-00 UTC).
On Wednesday, the economic calendar for the UK contains only one report that deserves attention. However, traders are more interested in the US economic reports which will be released in the second half of the day. The US dollar is projected to rise following ADP data. Yet, bulls are betting on weak data so that the pair may consolidate above 1.3730.
COT report (Commitments of traders):
The latest COT report from August 24 on the pound sterling showed that the sentiment of major market players has become more bearish. During the reporting week, speculators closed 2,266 Long contracts and immediately opened 18,903 Short contracts. Thus, now the total number of Long contracts is less than the total number of Short contracts. In one week, the sentiment of speculators has changed dramatically. The question is whether the pound sterling will now continue to fall. As I have already said, traders have big problems with the level of 1.3600. So, the pound sterling is likely to sustain its upward movement. The further fall of the quotes may not take place at all.
Outlook for GBP/USD:
Today, it is recommended to open long positions if there is a rebound on the 1H chart from the level of 1.3731 and the trend line with the targets levels of 1.3792 and 1.3830. It is better to open short positions with the target levels of 1.3692 and 1.3642, if it closes below the level of 1.3731 and the trend line on the 1H chart.
TERMS:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, and large investors.
"Commercial" - commercial enterprises, firms, banks, and companies that buy foreign currency not for speculative income, 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.
