GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair performed a rebound from the corrective level of 76.4% (1.3721) and some growth in the direction of the corrective level of 61.8% (1.3820), near which there was a reversal in favor of the US currency and the process of returning quotes to the level of 76.4% began. Yesterday, the information background was clearly on the side of the British currency. I already said in my article on the euro/dollar that the ADP report on the change in the number of people employed in the private sector was quite strong, but still slightly below the forecast. Therefore, traders either did not consider it necessary to react to it or expected an even better value and were disappointed. Anyway, these figures were ignored. But the morning report on the UK GDP for the 4th quarter was more than fulfilled.
Traders expected it to remain unchanged from the previous estimate and remain at 1.0% q/q and -7.8% y/y. However, it turned out that the economic recovery in the 4th quarter, when another lockdown was already in effect in the UK, continued and even faster than previously thought. The economy grew by 1.3% q/q during this period and contracted by 7.3% y/y. The British dollar rose by 50 points on this news. However, at the same time, it is still difficult for bull traders to continue their growth. In general, it looks as if a new upward trend has already begun. If so, the pair will close above the level of 61.8%. Today, the information background will be much weaker than yesterday. The indices of business activity in the manufacturing sector are in the "green" zone and do not cause any concerns. Data on applications for unemployment benefits in the United States is also unlikely to disappoint traders, as the US economy has recently recovered at a high pace.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair has started a new growth process in the direction of the downward trend line, which still characterizes the mood of traders as "bearish". However, there was no signal to sell over the past day. The pair's quotes did not reach either the trend line or the level of 1.3850.
GBP/USD – Daily.
On the daily chart, the pair's quotes closed under the ascending trend line. Thus, in the long term, the "bullish" mood of traders has changed to "bearish". This is an important point for the prospects of the British currency.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair completed a close over the second downward trend line. Thus, the chances of long-term growth of the pound remain.
Overview of fundamentals:
On Wednesday, an important GDP report was published in the UK, but bull traders need to take the trend line on the 4-hour chart to expect more serious growth.
News calendar for the United States and the United Kingdom:
UK - manufacturing PMI (08:30 UTC).
US - number of initial and repeated applications for unemployment benefits (12:30 UTC).
US - ISM manufacturing index (14:00 UTC).
On Thursday, in the UK and America, the calendars of economic events contain only secondary reports. Perhaps traders will pay attention to the business activity indices, however, there is little chance of this, from my point of view.
COT (Commitments of Traders) report:
The latest COT report on March 23 for the British pound showed moderate changes in the mood of major players. The category of "Non-commercial" traders again got rid of long contracts, closing 3,249 of them, and also increased short contracts, opening 4,405 of them. Thus, the mood of speculators has again become much more "bearish". However, this effect is achieved mainly by reducing the number of long contracts. In general, in recent months, the total number of short-contracts focused on the hands of speculators has not changed - 30-40 thousand. Thus, the British dollar can continue to fall, and the trend line on the 4-hour chart will help determine the moment when it will end.
GBP/USD forecast and recommendations for traders:
It was recommended to buy the British dollar in case of a new rebound from the level of 76.4% (1.3721) on the hourly chart. However, the target of 1.3820 was not worked out. New purchases of the pair – with a new rebound from the level of 1.3721. It is recommended to sell the pound sterling at the close of quotes under the level of 127.2% (1.3701) on the 4-hour chart with targets of 1.3625 and 1.3560.
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 support current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
The material has been provided by InstaForex Company - www.instaforex.com