GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair quotes fell to the corrective level of 161.8% (1.2789). The rebound of quotes from this level will allow traders to expect a reversal in favor of the British currency and some growth in the direction of the corrective level of 127.2% (1.2937). Closing the pair's rate below the level of 161.8% will increase the probability of a further fall in quotes in the direction of the Fibo level of 200.0% (1.2625). Meanwhile, the European Union has responded harshly to Boris Johnson's attempts to break the Brexit agreements that were agreed on last year. Representatives of the European Union officially stated that London has no right to adopt such laws, and believe that any violation of the terms of the agreement would be a gross violation of international law and jeopardize any further negotiations with London. It is reported that under the Brexit agreement of 2019, all goods that are sent to Northern Ireland from the rest of the UK and further to Ireland and the rest of the European Union must be subject to tariffs. According to the law that Boris Johnson is going to pass and the vote on which will take place next week, London itself will make decisions on the movement of goods from mainland Britain to Northern Ireland. Thus, now we need to wait for the end of the vote in the British Parliament on this bill, which has already been criticized around the world and even by representatives of Wales, Scotland, and Northern Ireland.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair rose to the corrective level of 38.2% (1.3010), rebounded from it, and turned in favor of the US currency with the resumption of the fall. Closing the pair's exchange rate under the Fibo level of 50.0% (1.2867) allows us to count on the continuation of the fall in the direction of the next corrective level of 61.8% (1.2720). A rebound from this Fibo level will work in favor of the British and some growth towards the level of 50.0%. Today, the divergence is not observed in any indicator.
GBP/USD – Daily.
On the daily chart, the pair's quotes fell to the corrective level of 76.4% (1.2776). The rebound of quotes from this level will allow us to count on some growth in the direction of the Fibo level of 100.0% (1.3199). However, it is more likely to consolidate under it and further fall.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair closed under the lower downward trend line, so a false breakout of this line followed earlier. The pair returns to a downward trend.
Overview of fundamentals:
There were no major economic reports in the UK or the US on Thursday. However, for the British pound, there are now many more important events than economic reports.
News calendar for the US and UK:
US - consumer price index (12:30 GMT).
US - consumer price index excluding food and energy prices (12:30 GMT).
On September 11, the UK news calendar again does not contain any interesting reports. However, new information may be received on the new bill, which implies a violation of agreements with the EU on the Irish border. In America, an important inflation report will be released, however, traders are unlikely to pay attention to it.
COT (Commitments of Traders) report:
Unlike the COT report on the euro currency, the latest COT report on the British pound was of a completely different nature. Major speculators during the reporting week again increased long-contracts, and also increased short-contracts. Thus, the mood of the "Non-commercial" group as a whole remained "bullish". Over the past 10 weeks, the total number of long contracts focused on the hands of speculators has also increased significantly, while the number of short contracts has decreased. So, according to the latest report, I can't conclude that the major traders have already decided to get rid of the pound. However, graphical analysis shows that the British pound has a high chance of continuing to fall. Thus, the next COT report may show a weakening of the bullish mood of major traders. I remind you that COT reports should not be used as signals to open positions, they only show the mood of large traders.
Forecast for GBP/USD and recommendations for traders:
I recommend selling the British currency with a target of 1.2625 if the closing is made at the level of 161.8% (1.2789) on the hourly chart. I recommend opening purchases of the British currency if it is fixed above the descending 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 for current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.