GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair performed a consolidation under the corrective level of 161.8% (1.3375), which allows traders to count on a further drop in quotes in the direction of the Fibo level of 127.2% (1.3264). And fixing the pair's rate below this level will increase the chances of falling towards the level of 100.0% (1.3176). The information background for the British remains negative. But at the same time, the British almost does not fall in price. The high reached on December 4 is the highest point for a Briton since May 2018. And this is although the "hard" Brexit is already 21 days away, and the parties still cannot agree on anything. What makes traders keep buying the pound (or at least keep long positions open) remains a mystery. But the fact remains. Last night, European Commission President Ursula von der Leyen and British Prime Minister Boris Johnson met in person. The meeting was organized to break the deadlock in the negotiations. The two officials had dinner together and declared "great differences remain". Did anyone doubt that the outcome of this dinner would be exactly that? What could Leyen and Johnson have agreed on in three hours if the groups of Michel Barnier and David Frost are working on an agreement almost around the clock without much success? However, the heads of the European Commission and the British government still held a meeting, which means "they are trying to find a way out of this situation".
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a rebound from the corrective level of 100.0% (1.3481) and a reversal in favor of the US currency with a fall in the direction of the Fibo level of 76.4% (1.3291). The pair's rebound from this level will allow traders to count on a reversal in favor of the UK currency and the resumption of growth towards the level of 100.0%. Closing the rate at 1.3291 will increase the probability of a further fall towards the level of 61.8% (1.3174).
GBP/USD – Daily.
On the daily chart, the pair's quotes performed a rebound from the corrective level of 100.0% (1.3513). And this is the most important and clear signal on all charts. If the rebound is not false (and so far it does not look false), then the Briton is waiting for a noticeable drop. But much now depends on the information background.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair performed an increase to the second downward trend line. A rebound from it in the long term will mean a reversal in favor of the US dollar and a long fall in the British dollar's quotes.
Overview of fundamentals:
There were no major economic reports in the UK and the US on Wednesday. However, traders remain fully focused on the topic of Brexit and trade negotiations between the UK and the EU.
News calendar for the United States and the United Kingdom:
UK - change in GDP (07:00 GMT).
UK - change in industrial production (07:00 GMT).
US - consumer price index (13:30 GMT).
US - number of initial and repeated applications for unemployment benefits (13:30 GMT).
On December 10, the UK has already released reports on GDP for October (+0.4%) and industrial production for October (+1.3%). The latest report was better than expected, but the British pound still started to fall. Traders are now paying more attention to trade negotiations, and everything is disappointing. Next up is the US inflation report.
COT (Commitments of Traders) report:
The latest COT report showed a new increase in the number of long contracts held by speculators. This time, their total number increased by 3,601 contracts, and the number of short-contracts decreased by 4,441 units. Thus, the mood of speculators has become much more "bullish". At the same time, this is a very rare situation. The number of long and short contracts focused on the hands of the "Non-commercial" and "Commercial" categories is almost equal. The same applies to data for all categories of major players. Thus, the market is now in balance, however, the future of the British is still more dependent on the outcome of trade negotiations between London and Brussels. Major traders will also adjust to these results. Thus, their mood may change very dramatically, based on the results of the negotiations.
GBP/USD forecast and recommendations for traders:
At this time, I recommend that you be extremely careful with opening any deals on the British. The pair continues to move very raggedly and often changes direction. I recommend making new purchases of the British dollar if the rebound from the level of 76.4% (1.3291) is completed with the target of 1.3481 on the 4-hour chart. I recommend selling the British dollar with a target of 61.8% (1.3174) if the close is made under the level of 76.4% 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 for current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.