GBP/USD – 1H.
Hello, traders! According to the hourly chart, the pound/dollar pair continues the growth after performing a reversal in favor of the British currency near the bottom line of the upward trend corridor. Thus, the general mood of traders is also "bullish", as well as for the euro/dollar pair. The reasons for the growth of the British pound now may also lie in the mass riots in America. There is no interesting information coming from the UK at the moment. Thus, it is the high-profile case of the murder of a black guy by a police officer that may be the reason that the US dollar is sold by traders. It is also worth noting that the British dollar is not growing as confidently and willingly as the euro. After all, Brexit continues to loom over the UK, the next negotiations with the European Union (this time Boris Johnson wants to personally conduct them) and in general, not the most bright and optimistic future. It is also worth noting that this week there will be little news from the UK again. Therefore, traders will pay attention primarily to events and reports from the US.
GBP/USD – 4H.
On the 4-hour chart, the pound/dollar pair performed a reversal in favor of the English currency and fixed above the corrective level of 23.6% (1.2354). Thus, the growth can be continued in the direction of the next corrective level of 0.0% (1.2647). On June 1, a bearish divergence is emerging in the CCI indicator, which allows traders to count on a reversal in favor of the US dollar and a slight drop in quotes. Closing the pair's exchange rate under the Fibo level of 23.6% will similarly work in favor of the US currency and the beginning of the fall. It is worth noting that the British currency has a greater chance of falling than the euro.
GBP/USD – Daily.
On the daily chart, the pair's quotes returned to the corrective level of 23.6% (1.2355). Closing quotes above this level will increase the chances of continuing growth towards the next Fibo level of 0.0% (1.2646).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair performed a false breakdown of the lower trend line. Thus, until the pair's quotes are fixed under this line, there is a high probability of growth in the direction of the top two trend lines, but in the long term.
Overview of fundamentals:
On Friday, the UK again did not release any economic reports. And reports from the US were again weak. But the key topic for America remains the mass riots, which have a very negative impact on the attractiveness of the dollar in the eyes of traders.
News calendar for the US and UK:
UK - manufacturing PMI (10:30 GMT).
US - ISM manufacturing index (16:00 GMT).
On June 1, only the manufacturing PMI will be released in the UK. A similar report will be released in the US. It is unlikely that they will arouse serious interest among traders.
COT (Commitments of Traders) report:
The latest COT report showed that major speculators of the currency market for the reporting week mainly opened new short-contracts. Their number in the hands of the "Non-commercial" group increased by almost 5,000. Long-term contracts were opened less willingly by speculators. And this is the main difference with the euro, whose long contracts were opened much more willingly. Thus, we can even say that during the reporting week, the "Non-commercial" group, which is considered to be the engine of the market, strengthened its "bearish" mood. The total number of short contracts held by the company also remains higher (58,000-42,000). The total number of new short contracts (the "Total" column) also increased more strongly than long during the reporting week. So I can conclude that the pound is unlikely to continue growing or it will be strong.
Forecast for GBP/USD and recommendations to traders:
I recommend making new sales of the pound in the current conditions with the goals of 1.2172 and 1.2025 if the pair closes under the trend corridor on the hourly chart. You can buy the English currency now since the pair remains inside the trend corridor, however, a reversal in favor of the dollar may be performed near its upper border, and bearish divergence is emerging on the 4-hour 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.