Hello, dear traders! On Monday, the GBP/USD pair got back to the 100.0% retracement level of 1.1735 and then rebounded, according to the hourly chart. The price is now heading towards 1.1883. A rebound from the level of 1.1883 may lead to a new fall. Meanwhile, if the quote closes above the mark, growth may extend to 1.2007. An ascending trend corridor indicates bullish sentiment.
On Monday, the UK's macroeconomic calendar was empty. Today, the report on unemployment logged an uptick to 3.6% versus 3.5%. Average earnings grew by 6%. An increase in unemployment is perceived as a negative factor. Meanwhile, earnings results could be interpreted differently. In August, the reading advanced by 6.1%, reflecting a slowdown in September, which is also a negative factor. The results of these two reports are as disappointing as the earlier data on Q3 GDP. Still, GBP is under strong buying pressure. The US dollar seems to be behind a rise in GBP that started post-US inflation.
The UK inflation report will also be released this week. Consumer prices are expected to accelerate again, this time, up to 10.7-11.0% y/y. In my opinion, this will be another negative report for GBP, but traders may ignore it as well. Now there are factors more important than the UK statistics. I believe the US inflation report can hardly have any influence on the market four days after its publication. Nevertheless, traders continue to buy the pound. Therefore, I think it is all about their sentiment. The dollar's bull run is prolonged enough to pause for several months. Still, there are hardly any serious factors for growth in GBP.
On the H4 chart, the pair consolidated above the 161.8% retracement level of 1.1709. It may now head towards 1.2008. If the quote closes below 1.1709, a reversal to the downside may occur and the price will head towards 1.1496. There are no emerging divergences today. An ascending trend corridor illustrates bullish sentiment.
Commitments of Traders:
Last week, speculators opened 1,651 new long positions and closed 3,450 short positions, which reflects a decrease in bearish sentiment. The overall sentiment is still bullish. However, the gap between short and long positions is too wide. Thus, GBP remains under strong selling pressure. Bullish sentiment has grown in recent months, though it has been a slow and long process. GBP is likely to extend gains, which is illustrated by the trend corridor on the chart. Meanwhile, macro data provides no support for GBP, and the current growth in value is hard to explain.
Scheduled macro events in the United States and the United Kingdom:
United Kingdom: Average Earnings (07-00 UTC); Unemployment Rate (07-00 UTC).
United States: PPI (13-30 UTC).
On November 15th, the UK saw the release of two macro reports. Meanwhile, the pound ignored the results. The US PPI is likely to be of little interest to traders.
Outlook for GBP/USD:
It will become possible to open short positions after consolidation below the trend corridor on the H1 chart, with the target at 1.1210. The price will test the target if the quote closes above 1.1411. The trade may be held with the targets at 1.1883 and 1.2007 until the quotes close at 1.1709.