GBP/USD – 1H.
Hi dear traders!
According to a 1-hour chart, GBP/USD began growing. The pair created an upward trend channel. Thus, both EUR and GBP are now following the same trajectory. Here comes the conclusion. Traders are now speculating mostly the US currency. That's why the euro and the pound sterling are reacting the same way. The economic calendar for the US is nearly empty this week. The most significant event of the recent days is the approval of the stimulus bill by the US Congress. The coronavirus relief package was proposed by President Joe Biden. The bill passed with a narrow margin in the Senate and the House of Representatives. To be more exact, the bill was finalized thanks to the Democrats' efforts because they make up the majority both in the Upper and Lower Chambers. So, they notched up a victory.
The next move is the signature from Joe Biden. Once the bill comes into force, every American will receive a paycheck of $1,400. Perhaps, this takes the shine off the US dollar. Indeed, GBP/USD has been trading under buying pressure in the latest days. Interestingly, the US dollar gives no response to rising yields of 10-year Treasuries. Thus, it is difficult to pinpoint the reasons why the US currency is creeping lower this week. There are a lot of factors amid the lack of statistics from the US. Probably, traders will figure out sentiment on GBP/USD through macroeconomic data from the UK. Today, the UK is due to report on GDP for January, industrial production, and trade balance. Meanwhile, the sterling is losing ground in the early trade on Friday. I cannot say that traders are braced for weak data from the UK because the euro is following suit.
GBP/USD – 4H.
In the 4-hour chart, GBP/USD dropped to the upward trendline and rebounded off it. Then, the price began a new cycle of growth towards 1.3979 and 1.4126 which are 161.8% fibo correction. The price fixation below the upward trendline will change trading sentiment to bearish so that traders can reckon a decline towards 1.3701 that is 127.2% fibo correction.
GBP/USD – Daily.
In the daily chart, GBP/USD is still hovering above the upward trendline. The bullish trading sentiment remains valid in the long term. If the pair closes above 1.4084 that is 127.2% fibo correction, this will confirm a further climb towards 1.4812 that is 161.8% fibo correction.
The weekly chart of GBP/USD reveals that the pair closed above the second downward trendline. This cements bullish prospects of GBP/USD in the long term.
COT report (Commitments of traders):
Economic calendar
On Wednesday, the economic calendar for the UK was empty. The US Labor Department released a weekly update on unemployment claims which didn't impress market participants.
Today on Friday, the following news is due:
The UK – GDP for January (07-00 GMT)
The UK – industrial production (07-00 GMT)
The UK – trade balance (15-00 GMT)
The US – Consumer Sentiment Index by University of Michigan (15-00 GMT)
Please be aware that the UK provides important data which could make a serious impact on GBP intraday.
COT report (Commitments of traders)
The latest COR report from March 2 was rather interesting for GBP. Importantly, market sentiment of GBP speculators changed to the opposite compared to EUR. In fact, trading sentiment for EUR got more bearish but trading sentiment for GBP turned more bullish. This is striking difference which explains the fact that EUR has been weakening for 2 months straight, but GBP has been losing ground for only 2 weeks in a row. The number of contracts, managed by non-commercial traders, decreased by 11,000. Long contracts fell by 2,600 but short contracts dropped by 8,200. All in all, large market layers are still betting on GBP strength.
Outlook for GBP/USD and trading tips
Earlier I recommended buying GBP during a bounce off the trendline in a 4-hour chart with targets at 1.3900 and 1.3980. Both targets have been reached. Today it would be a good idea to sell GBP if the price closes below the trend channel in a 1-hour chart with targets at 1.3900 and 1.3820.
Terms
The Non-commercial category includes major market players: banks, hedge funds, investment funds, private, and large investors.
The Commercial category embraces commercial enterprises, firms, banks, corporations, companies that buy currency not to obtain speculative profit, but to ensure current activities or export-import operations.
The category of Non-reportable positions means small traders who do not have a significant impact on the price.