GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair performed a reversal in favor of the US currency, anchoring under the upward trend corridor. Thus, the fall in the pair's quotes can be continued in the direction of the corrective levels of 50.0% (1.3267) and 61.8% (1.3216). The pound has been growing for quite a long time and persistently. I have one very important question: why was the pound growing up all this time? The economic situation in America has been difficult in recent months. The coronavirus epidemic has taken a very difficult toll on the American economy. Nevertheless, there are enough economic problems in the UK. I would like to remind you for the hundredth time that London still does not have a free trade agreement with the European Union. And there's a 99% chance it won't, at least not this year. Thus, the UK economy is 99% likely to suffer additional losses from the severance of all ties between British and European companies. Against this background, the growth of the British looks strange. However, it should also be noted that after the collapse of its quotes at the very beginning of the coronavirus pandemic, the pound has just returned to pre-crisis levels. Thus, we can even say that the pound has not grown or fallen against the dollar in the last six months. It was a shock for six months, after which everything just fell back into place. But even in this case, I expect a downward movement now by 400-500 points.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a rebound from the upper border of the uptrend corridor and a reversal in favor of the US currency with the beginning of a fall in the direction of the corrective level of 161.8% (1.3157) and the lower border of the corridor. Thus, the current chart now speaks only in favor of continuing the decline in quotes. The rebound of quotes from the lower border of the corridor may work in favor of the pound and the resumption of growth. I am more inclined to close under the corridor and continue falling towards the level of 127.2% (1.2964).
GBP/USD – Daily.
On the daily chart, the pair's quotes performed a consolidation above the corrective level of 100.0% (1.3199), which now allows us to count on continuing growth in the direction of the next Fibo level of 127.2% (1.3684). However, the lower charts tend to fall in the quotes of the British dollar.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair closed above the lower downward trend line. Thus, the growth process can now be continued in the direction of the second downward trend line, fixing above which will further increase the probability of further growth of the British dollar.
Overview of fundamentals:
On Wednesday, the Bank of England Governor Andrew Bailey made a speech in the UK, saying that he is not going to introduce negative rates in the near future (good for the pound). In addition, the ADP report showed a weak value (good for the pound), however, traders ignored this news and continued to get rid of the British dollar, which led to its fall.
News calendar for the US and UK:
UK - PMI for services (08:30 GMT).
US - number of primary and secondary applications for unemployment benefits (12:30 GMT).
US - ISM composite index for non-manufacturing (14:00 GMT).
UK - Bank of England Governor Andrew Bailey will deliver a speech (14:00 GMT).
On September 3, another speech by Andrew Bailey will take place in the UK, and an important ISM index in the US will also be released.
COT (Commitments of Traders) report:
The latest COT report on the British dollar showed a sharp drop in interest among speculators in this currency. A Group of non-commercial traders cut both long and short contracts in equal amounts during the reporting week. Thus, despite the fact that the number of contracts focused on their hands has decreased by 19 thousand, the mood among large traders has not changed, that is, it has not become more "bearish". Thus, according to the COT report, there are still no prerequisites for the end of the upward trend. Moreover, in the last days of the past week, the British dollar resumed growth, so we can assume even more strengthening of the "bullish" mood among major traders. The reduction in the number of contracts for both the "Non-commercial" group and all groups of traders combined did not affect the pair's volatility in any way.
Forecast for GBP/USD and recommendations for traders:
I recommend selling the British currency with the target of 1.3200, as the rebound from the level of 200.0% (1.3478) on the hourly chart and closing under the trend corridor was performed. Purchases of the British dollar can be opened if there is a rebound from the lower border of the ascending corridor on the 4-hour chart with the goal of 1.3373.
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.