GBP/USD – 1H.
Hello, dear traders! On the 1H chart, GBP/USD advanced to the 200% retracement level of 1.4216 and reversed. Traders can now expect the pair to fall to the 161.8% Fibo level of 1.4136. However, in case of consolidation above the 200% retracement level, the bullish trend will resume, and the price may rise to the 261.8% retracement level of 1.4344. Meanwhile, in the United States, stimulus talks are ongoing between Democrats and Republicans. US President Joe Biden proposes two plans worth $4 trillion at once. Both packages will be funded by higher taxes for wealthy Americans, as well as increased corporate taxes. These legislations, as well as tax hikes, should be approved by Congress. Republicans are against higher taxes. The party is ready to approve only the infrastructure package that costs $800 billion. At the same time, Republicans do not have the majority in Congress. Therefore, both stimulus plans are likely to be approved. Nevertheless, the parties continue negotiating, and the outcome will become known soon. Meanwhile, unemployment in the United Kingdom decreased along with the claimant count, boosting the pound.
GBP/USD – 4H.
On the 4H chart, GBP/USD rebounded from 1.4003. The price has been moving upward within the ascending corridor since then. This corridor indicates bullish sentiment in the market. Traders can expect the greenback to rise if only the price consolidates below the ascending corridor.
GBP/USD – Daily.
According to the daily chart, the pair is moving along the trend line. If the pair closes below this line, the trend will reverse. Then, the quote may start falling to the 100.0% retracement level of 1.3513. Until then, the price may rise to the 161.8% retracement level of 1,4812.
GBP/USD – Weekly.
The weekly chart shows that GBP/USD has consolidated above the second descending trend line. The pair is likely to move upward in the long-term.
Round-up:
On Tuesday, a series of data on unemployment and earnings was published in the UK. The results boosted the pound. Governor Andrew Bailey's speech did not provide any new information for traders.
Economic calendar:
The UK's CPI and retail sales are due today. In the US, the FOMC Minutes is set to be published.
Commitments of traders report (COT):
The COT report as of May 4 revealed that bullish speculative sentiment decreased. The report as of May 11 logged a sharp increase in long contracts of Non-commercial traders. The reading rose by 15,059, while short contracts grew by 6,058. As a result, bullish speculative sentiment increased significantly. All in all, the COT report indicates that the bullish trend on GBP/USD is likely to extend.
GBP/USD forecast:
Long positions in GBP/USD can be considered with the target at 1.4240 as the price has rebounded from 1.4003 on the 4H chart. In addition, you can enter long trades after closing above 1.4216 on the 1H chart, with the target at 1.4344 . Short positions can be considered if the pair closes below the ascending trend line on the 1H chart. The target is seen at 1.3959.
TERMS:
Non-commercial traders are major market players: banks, hedge funds, investment funds, private and large investors.
Commercial traders are commercial enterprises, firms, banks, corporations, companies that buy currency not for speculative profit, but for ensuring current activities or export-import operations.
Non-reportable positions are small traders who do not have a significant impact on the price.
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