GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair performed a new reversal in favor of the British dollar yesterday and increased to the corrective level of 200.0% (1.4216). The rebound from this level (already the third) allowed us to perform a reversal in favor of the US currency and begin the process of falling in the direction of the corrective level of 161.8% (1.4136). Fixing the pair's rate above the level of 200.0% will work in favor of continuing the growth of quotes in the direction of the next Fibo level of 261.8% (1.4344). Meanwhile, the Bank of England representative, Gertjan Vliege, provided tangible support to the Briton, who said yesterday at a lecture at the University of Bath that the Bank of England could raise the key rate as early as next year. "This could happen even sooner if the economy recovers faster than we plan," Vliege said. Traders took this information positively, as in this case, the Bank of England may become the first to tighten monetary policy after the pandemic and the crisis. Let me remind you that the representatives of the Federal Reserve have not yet provided any signals about curtailing the bond-buying program or raising the rate. Thus, although the US economy is recovering at the fastest pace in the world, it is the Bank of England that can move from words to action first. But it is necessary to note another fact. The British dollar rose on this news to the level of 1.4216. However, it will still be difficult to grow higher. It is evidenced by the three rebounds from this level and the fact that the British economy only began to recover in the second quarter. And the US economy grew both in the fourth quarter of 2020 and in the first quarter of 2021. And it is likely to show record growth (not counting the third quarter of 2020) in the second quarter.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a reversal in favor of the British dollar and resumed the growth process in the direction of the corrective level of 0.0% (1.4240). The rebound of quotes from this Fibo level will favor the US dollar and a new fall in the direction of the level of 1.4003. Closing above the level of 1.4240 will increase the probability of further growth of the pair.
GBP/USD – Daily.
On the daily chart, everything still rests on the trend line, along which the movement of quotes of the pound/dollar pair continues. Closing quotes under this line will work in favor of the US dollar and start falling 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 Thursday, there was no economic data in the UK. However, the speech of Gertjan Vliege supported the Briton. The US reports did not cause any reaction from traders.
News calendar for the United States and the United Kingdom:
US - main index of personal consumption expenditures (12:30 UTC).
US - change in the level of household spending (12:30 UTC).
US - change in the level of income of the population (12:30 UTC).
On Friday in the UK, the calendar of economic events will remain as empty as it has been for the whole of this week. In the US, some interesting reports will be released.
COT (Commitments of Traders) report:
The COT report of May 18 on the British dollar showed that the "bullish" mood of speculators became slightly weaker, in contrast to the report of a week ago. Thus, in general, it is noticeable that speculators continue to increase long contracts for the British. The total number of long contracts in the "Non-commercial" category of traders exceeds the number of short contracts by two times. Thus, the sentiment remains "bullish," and the latest COT reports have not shown any drastic changes in this. I will also note the extremely low activity of all categories of traders, as a total of only 6.5 thousand contracts were opened during the reporting week.
GBP/USD forecast and recommendations for traders:
I recommend buying the British dollar if the pair performs a rebound from the trend line on the daily chart, with a target of 1.4216. I recommend selling the pound if a close is made under the ascending 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 provide current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.