GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair performed a reversal in favor of the British currency and increased to the corrective level of 38.2% (1.3747) on the small Fibo grid. The rebound from this level has already worked in favor of the US currency. However, so far, the pair have only started a correction after a strong growth on Thursday. The fall of quotes can be continued in the Fibo level of 23.6% (1.3692) on the small Fibo grid. A rebound from this level will allow us to count on new growth. Yesterday, the Bank of England announced the results of its meeting. Following the Fed, the British regulator moderately strengthened the "hawkish" rhetoric. The accompanying statement said that the labor market continues to recover. However, companies are still experiencing some difficulties with hiring employees. Nevertheless, the Bank of England believes that the minimum conditions for tightening monetary policy were met. However, the regulator did not name any dates for the possible refusal to start buying bonds and other securities.
The most important change occurred during the voting of the board members on the incentive program. This time, two members of the management board have already spoken in favor of reducing it. There was only one such person at the previous meetings. It is precisely the strengthening of the "hawkish" attitude. In all other respects, the Bank of England adhered to the same position as the Fed. Thus, traders are still in limbo.
On the one hand, both central banks have been signaling that they are ready to start phasing out bond purchases for several months. On the other hand, there are still no specific dates for the start of this process. Both banks will closely monitor the pace of economic recovery and the labor market. And if there is a deterioration in the situation, perhaps the programs will last longer than it seems now. In Britain, business activity indices also declined in September. In the manufacturing sector, from 60.3 to 56.3, and in the service sector – from 55.0 to 54.3. The indices have continued to fall for several months, coinciding with the increase in the number of coronavirus diseases.
GBP/USD – 4H.
The GBP/USD pair on the 4-hour chart performed an increase to the corrective level of 38.2%, rebounding from it with the formation of two bearish divergences at the CCI indicator. Thus, traders can count on at least a small correction, after which the growth process can resume. Closing the pair's exchange rate above the level of 38.2% will work in favor of continuing growth towards the next levels of 50.0% and 61.8%.
News calendar for the United States and the United Kingdom:
UK - a member of the ILC of the Bank of England, Silvana Tenreyro, will make a speech (13:00 UTC).
US - Chairman of the Federal Reserve Board of Governors Jerome Powell will make a speech (14:00 UTC).
US - FOMC member Michelle Bowman will give a speech (14:00 UTC).
US - FOMC member Richard Clarida will give a speech (14:00 UTC).
On Friday, the calendar of economic events in the UK and the US contains only speeches by representatives of central banks. The most important will be the performance of Jerome Powell. However, traders will expect new hints from both the Fed and the Bank of England about their readiness to abandon incentive programs and trade in accordance with the new information.
COT (Commitments of Traders) report:
The latest COT report on September 14 for the pound showed that the mood of major players has become more "bullish." At the same time, it is much more "bullish." During the reporting week, speculators opened 14,796 long contracts and closed 14,526 short contracts. Thus, the balance of power between bulls and bears has changed dramatically. Now, there are more contracts in the hands of bulls – 45,673, and 39,296 contracts in the hands of bears. Although a week ago, the situation was the opposite. Thus, despite the fall in the quotes of the British dollar in the last week, the chances of growth of this currency increased sharply after the latest COT report. I would also like to note that the "Commercial" category of traders got rid of 66 thousand long contacts and 33 thousand short contracts. The total number of contracts on their hands for the week decreased by a third.
GBP/USD forecast and recommendations for traders:
I recommend new purchases of the British when rebounding from the level of 1.3692 on the hourly chart with targets of 1.3747 and 1.3792. Or when closing above the level of 1.3747 with targets of 1.3792 and 1.3830. It was necessary to open sales at the rebound from the level of 1.3747. Now, they can be kept open, but I do not expect a strong drop in the pair.
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 ensure current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.