According to the hourly chart, the GBP/USD pair continued to grow on Monday and Tuesday. Yesterday, a close was made above the level of 1.2272, and today - above the corrective level of 423.6% (1.2432). Thus, in just less than a day, the pound managed to show an increase of 220 points. Now the growth process can be continued towards the next level of 1.2600. The consolidation of quotes below the level of 1.2432 may work in favor of the American and the resumption of the fall. In the UK, several reports were released this morning, which could greatly affect the mood of traders. Although not all reports have been worked out recently, this morning, traders played exactly in accordance with the data received. The unemployment rate in the UK fell to 3.7%, the number of applications for unemployment benefits decreased by 56.9 thousand, and average earnings increased by 7.0% m/m. All three reports were better than traders' expectations.
This is probably why bull traders started strong purchases of the pound today. However, not only these reports could greatly help the euro and the pound. Jerome Powell and Christine Lagarde will begin speaking in a few hours. Although it is not known now what they will talk about, traders can still assume. No one expects Jerome Powell to toughen the "hawkish" rhetoric now. The latest US GDP report turned out to be weak and hardly allows the Fed to accelerate the process of raising interest rates even more. Traders expect Powell to pay attention to the weak GDP data in the first quarter and, perhaps, even question the 0.50% rate hike at the next two meetings. In part, traders could react to the information from Ukraine, which I have already mentioned. In my opinion, it is not too optimistic, nevertheless, a few weeks ago the euro and the pound showed growth when the Ukrainian-Russian negotiations made a positive shift. It turned out later that there was almost no progress, and even later that the negotiations were practically canceled.
On the 4-hour chart, the pair secured above the corrective level of 127.2% (1.2250), which allowed it to continue the growth process towards the next Fibo level of 100.0% (1.2674). The "bearish" divergence of the CCI indicator was canceled. The pound is quickly recovering from the losses of recent weeks. A rebound from the level of 1.2674 may work in favor of resuming the fall of quotes. It is still too early to talk about the change from the "bearish" mood of traders to "bullish".
Commitments of Traders (COT) Report:
The mood of the "Non-commercial" category of traders has not changed too much over the past week. The number of long contracts in the hands of speculators decreased by 4,067 units, and the number of short contracts increased by 1,718. Thus, the general mood of the major players has become even more "bearish". The ratio between the number of long and short contracts for speculators still corresponds to the real picture on the market - longs are 4 times more than shorts (10,9067-29,469). The big players continue to get rid of the pound. Thus, I expect that the pound may continue its decline over the coming weeks. But also such a strong gap between the number of longs and shorts may indicate an imminent change of trend in the market. I do not rule out that the British will end its long decline in the near future.
News calendar for the USA and the UK:
UK - change in the number of applications for unemployment benefits (06:00 UTC).
UK - unemployment rate (06:00 UTC).
UK - change in the level of average earnings (06:00 UTC).
US - change in retail trade volume (12:30 UTC).
US - change in industrial production (13:15 UTC).
US - Chairman of the Fed Board of Governors Jerome Powell will deliver a speech (18:00 UTC).
On Tuesday, the calendars of economic events in the UK and the US are crowded. Three important reports have already been published in Britain, which supported the pound very much. Important reports in the US and Jerome Powell's speech are also ahead. The information background is very strong today.
GBP/USD forecast and recommendations to traders:
I don't recommend selling the pound right now - the pair's growth is too strong. I recommended buying the pound if the closing above the level of 1.2272 with a target of 1.2432 is completed. Now, this deal can already be closed. Or stay in a bought deal with a target of 1.2600 and a Stop Loss level below 1.2432.