GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair on December 31-January 4 performed an increase to the corrective level of 261.8% (1.3698). The rebound of quotes from this level will allow traders to count on a reversal in favor of the US currency and some fall in the direction of the upward trend line. Fixing quotes under the trend line will change the mood of traders to "bearish" and increase the chances of continuing to fall in the direction of the corrective level of 200.0% (1.3499). As we can see, the new year began with another growth of the British currency. Trade negotiations and Brexit are in the past, now the UK is a fully independent country and will build its international relations exclusively as Boris Johnson decides. Throughout 2021, London will probably try to conclude several more trade agreements. The most important agreement is the agreement with America. Potentially, it can be approximately the same in volume as with the European Union. However, for the British pound, the state of the economy will be more important in the coming months. Many economists believe that despite the trade deal with the EU, the British economy will still shrink. That is, the fourth quarter of 2020 may be negative in terms of GDP growth. Do not forget that, in addition to economic problems, the problem of coronavirus also continues to be acute in the UK. Strict quarantine was in November and it continues in December because of a new strain of COVID. Thus, GDP may contract again in the fourth and first quarters. How will the pound react to this?
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed an increase to the corrective level of 127.2% (1.3701). The rebound of quotes from this Fibo level will work in favor of the US currency and the beginning of the fall in the direction of the corrective level of 100.0% (1.3481). Fixing the pair's rate above the level of 127.2% will increase the probability of further growth in the direction of the next corrective level of 161.8% (1.3977).
GBP/USD – Daily.
On the daily chart, the pair's quotes performed a consolidation above the corrective level of 100.0% (1.3513). Thus, the growth process can be continued in the direction of the next Fibo level of 127.2% (1.4084).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair closed above the second downward trend line. Thus, the chances of long-term growth of the pound are significantly increased.
Overview of fundamentals:
There were no economic reports or other developments in the UK and the US on Thursday. The information background was completely absent.
The economic calendar for the US and the UK:
UK - PMI index for the manufacturing sector (09:30 GMT).
US - index of business activity in the manufacturing sector (14:45 GMT).
On January 4, the calendar of economic events in the UK and the US are almost empty. Only the most important business activity reports will be released.
COT (Commitments of Traders) report:
The latest COT report showed that speculators were getting rid of both long and short contracts. The new COT report, which was released last night, showed small changes in the mood of major traders. The "Non-commercial" category of traders opened the reporting week until December 21 - 2,000 new long contracts and 500 short contracts. Such figures do not allow us to draw any serious conclusions about the future of the British pound. It can be noted that speculators again increased purchases of the British, however, this was already 8 days ago. The total number of long contracts focused on the hands of speculators is only 8,000 more than short contracts. For example, the difference in the euro currency is 3 times. Thus, I still can not conclude that the mood for the British is exclusively "bullish" and that the pound will continue to grow.
GBP/USD forecast and recommendations for traders:
It was recommended to open new purchases of the British dollar in case of consolidation above the level of 1.3618 on the hourly chart with targets of 1.3698 and 1.3800. Now it is recommended to open them if a close above 1.3698 is performed. I recommend selling the pound sterling at a rebound from the corrective level of 127.2% on the 4-hour chart with a target of 1.3618 or with a target of 1.3499 when closing under the trend line on the hourly chart.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
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