GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair quotes increased to the corrective level of 161.8% (1.4136) and stopped near it. Thus, now the quotes may fall at least to the level of 127.2% (1.4064). I said in yesterday's article that the strong rise in the British pound on Monday was most likely due to the results of the parliamentary elections in Scotland, as the chances of holding an independence referendum increased significantly after the results were announced. Scotland's First Minister Nicola Sturgeon said yesterday in a conversation with Boris Johnson that as soon as the pandemic and the recovery from it are over, her government intends to immediately put on the agenda the issue of holding a second independence referendum (the first was held in 2014).
According to Sturgeon, her country has a legitimate right to hold a referendum without London's approval. However, London can then use its right to go to court and challenge the legality of this popular will. From my point of view, Nicola Sturgeon's policy is very wise. Do not seek permission from London, hold a referendum, and then act on the results of the people's will. If the Scots decide that they do not want to leave the UK, then the issue will be closed for decades. If the Scots vote to break away from England and return to the European Union, then Boris Johnson will be at a disadvantage, as he will oppose the will of an entire people. In general, for Britain, the next few years promise to be no less interesting than the "Brexit years." By the way, today, there will be a speech by the Governor of the Bank of England, Andrew Bailey, which may be very interesting in light of new developments in Scotland.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair closed above the level of 1.4003, which now allows traders to count on continued growth in the direction of the next corrective level of 0.0% (1.4240). There are no emerging divergences in any indicator today.
GBP/USD – Daily.
On the daily chart, everything rests on the trend line, along which the movement of quotes of the pound/dollar pair continues. Closing the exchange rate under this line will favor the US currency and the beginning of the fall of quotes in the direction of the corrective level of 100.0% (1.3513). Until this happens, the growth process will continue at the corrective level of 161.8% (1.4812).
GBP/USD – Weekly.
The pound/dollar pair completed a close over the second downward trend line on the weekly chart. Thus, the chances of long-term growth of the pound remain.
Overview of fundamentals:
On Monday, there was no important economic data in the UK and the US. However, traders worked hard on the information received at the weekend. As a result, the British dollar grew very much.
News calendar for the United States and the United Kingdom:
UK - Bank of England Governor Andrew Bailey will deliver a speech (14:30 UTC).
On Tuesday, the information background will be absent in the US. There will be a speech by Andrew Bailey in the UK, which can give important information to traders.
COT (Commitments of Traders) report:
The latest COT report from May 4 on the British dollar showed that speculators' "bullish" mood has become much weaker. And this is although the British dollar continues to grow, which is best seen on the long-term daily chart. Nevertheless, the "Non-commercial" category of traders closed 7,628 long contracts and opened almost 2 thousand short contracts during the reporting period. Thus, the mood of speculators has become much more "bearish." However, based on the movement of the Briton, we can conclude that this is a simple accident. The trend cannot be maintained upward if the most important category of traders does not buy the pair.
GBP/USD forecast and recommendations for traders:
It was recommended to buy the British dollar with a target of 1.4084 if there is a rebound from the trend line on the daily chart. At this time, this position should be kept open with a target of 1.4240. I recommend selling the pound if a close is made under the trend line on the daily chart with a target of 1.3513.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to support current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.