According to the hourly scale, the GBP/USD pair returned to the level of 1.1933 and came close to touching the falling trend line. A rebound from this level or this line would operate in favor of the U.S. dollar and would resume the decline in the direction of the corrective level of 685.4% (1.1684). Fixing the pair's exchange rate above the trend line will allow us to anticipate further gains in the British pound toward the next corrective level of 523.6 percent, or 1.2146. This morning, the United Kingdom delivered the week's first economic reports. In May, GDP rose by 0.5% compared to estimates of 0.1-0.0%, while over the previous three months, GDP grew by 0.4% compared to predictions of 0.1-0.0%. Consequently, the British figures could have satisfied the bulls, but the bulls themselves did not take advantage of the opportunity to begin purchasing the British currency. Moreover, industrial production rose more rapidly than planned. 1.4 percent over the expected -0.3 percent decline.
The report on U.S. inflation is more significant, but if such positive data from the United Kingdom cannot support the pound, what can?
Yesterday's performance by Andrew Bailey was similarly unimpressive. I anticipate that Britain's fall will continue based on the existing situation. The only opportunity for the pair is a sharp consolidation above the trend line, although such a signal does not indicate that the decline has ended. For the British to anticipate robust growth, a downward trend line on the 4-hour chart must also be surmounted. There are too many "buts" currently preventing the pound from rising. In the evening, the American economic evaluation "Beige Book" will be published, which can likewise not be relied upon too heavily. This is merely an overview of evaluations of all Federal Reserve banks that are part of the Fed system.
After establishing a "bullish" divergence at the MACD indicator, the pair staged a reversal in favor of the British pound on the 4-hour chart. However, the currency has not been able to increase even to the nearest level of 1.1980. Thus, the quote decline may resume toward the corrective level of 161.8% (1.1709). Bearish sentiment continues to be represented by the dropping trend line.
Report on the Commitments of Traders:
The sentiment of "non-commercial" traders has gotten more "bearish" during the past week. The number of long contracts held by speculators rose by 4,434, while the number of short futures rose by 7,524. Thus, the general sentiment of the major participants has stayed the same - "bearish" - and the number of short contracts continues to outnumber the number of long contracts vastly. Major players continue to shed the pound for the most part, and their disposition has not changed significantly in recent times.
Consequently, I believe that the British pound's depreciation could continue over the coming weeks. A significant disparity between the number of long and short contracts may signal a trend reversal, but the context of the information is currently of far greater importance to key players. And the score remains against the British pound. To date, it is not logical to deny that speculators sell more than they purchase.
News calendar for the USA and the UK:
UK - industrial production volume (06:00 UTC).
UK – GDP (06:00 UTC).
US - consumer price index (CPI) (12:30 UTC).
US - The Fed's "Beige Book" (18:00 UTC).
The United Kingdom has already released its scheduled statistics on Wednesday. Following is the US inflation report and Beige Book. I believe that the informational context will have a moderate effect today.
Forecast and suggestions for the GBP/USD exchange rate:
When the British pound rebounds from the trend line on the hourly chart with a price goal of 1.1709, I recommend purchasing further shares. With a target of 1.2146, I advise purchasing the British pound when the hourly price closes above the trend line.
