GBP/USD – 1H.
Hi, dear traders!
Yesterday, according to the 1-hour chart, the GBP/USD pair fell to the retracement level of 76.4% (1.3511) and settled below it. The quote continues its downward movement today, approaching the retracement level of 100.0% (1.3411). If the pair rebounds from this level, it could lead to an upward reversal towards the 76.4% Fibonacci level of 1.3511. If the quote closes below 1.3411, further downward movement towards the next retracement level of 127.2% (1.3297) is expected. The sell-off was triggered by the recent Bank of England meeting. Its impact was strong enough to push the sterling down by 250 pips, although the decision itself was not so disastrous. Many analysts expected the regulator to raise the interest rate and were disappointed. The Bank of England hinted at the possibility of monetary policy tightening in the future - several board members voted for hiking the rate and reducing the stimulus program. However, it has already been priced by traders. Today, the sterling can go either way. The downward channel indicates a continuing bearish trend. The quote is likely to fall regardless of the NFP results. If Non-Farm Payrolls rise above 455K in October, beating market expectations, the greenback will strengthen further. Otherwise, if the reading declines, the dollar may fall. However, due to strong bearish sentiment in the market, it might not happen.
GBP/USD – 4H.
According to the 4-hour chart, the quote continues to decline. It has closed below the 50.0% retracement level of 1.3457. The pair may continue its downward movement towards the 61.8% retracement level of 1.3274. The indicators show no signs of emerging divergence. If the pair settles below the 1.3457 level, modest growth would be possible.
US and UK economic calendar:
UK - Speech by BoE Deputy Governor for Markets and Banking, David Ramsden (12-15 UTC)
US - Unemployment rate report (12-30 UTC)
US - Non-farm employment change (12-30 UTC).
US - Average hourly earnings change (12-30 UTC).
UK - Speech by BoE MPC member Silvana Tenreyro (13-00 UTC).
The Friday speeches by the Bank of England's MPC members will likely be overshadowed by the US non-farm payroll report. Strong information noise is expected.
COT (Commitment of Traders) report:
COT (Commitment of Traders) report:
The latest COT report as of October 26 for GBP/USD indicates an increasingly bullish mood among major players. Traders opened 2,872 Long positions and closed 10,648 Short positions. The number of Long positions among major players exceeds the number of Short positions by 17,000. Sentiment among non-commercial traders has turned bullish, but the pair can still fall. According to the chart, the price left two trend channels at once. In recent weeks, market players were uncertain whether to buy or sell the pair. So, the number of Long and Short positions is the same for all categories of traders. After four weeks of active buying, traders may well shift to active selling.
Outlook for GBP/USD:
Due to the prevailing bearish trend, traders should refrain from buying the pair at the moment. Short positions could be opened if the pair closes below 1.3411 at the 1-hour chart, with the target at 1.3297. However, traders should trade cautiously because the NFP results could trigger volatility in the second half of the day.
Terms:
Non-commercial traders are major market players: banks, hedge funds, investment funds, and large private investors.
Commercial traders are commercial enterprises, firms, banks, corporations, companies that buy currency not to obtain profit, but to maintain current activities or import-export operations.
The category of non-reportable positions includes small traders who do not have a significant impact on the price.