Hello, dear traders! On the 1-hour chart, GBP/USD went up and tested the mark of 1.2432 on Tuesday. Later, the quote pulled back and fell slightly. Currently, the price is again on the rise to the above-mentioned mark. Should the pair settle above it, growth may extend to the 161.8% retracement level of 1.2591.
The pound strengthened against the greenback on Tuesday post-US inflation. However, when the labor market report was delivered in the UK, traders showed little interest in it. Likewise, they ignored data on UK inflation, which slowed to 10.7% versus 11.1%, its first drop in a long time.
The fact that traders paid no attention to the results is strange because the Fed and the Bank of England may reduce the pace of tightening already in December. Meanwhile, traders are selling the greenback. Inflation in the US has decreased but traders are still selling the dollar. In other words, no matter the reason, traders are now buying GBP/USD. Therefore, the meetings of the Fed and the BoE might again be used for selling the greenback. It's no secret that traders may interpret central banks' statements differently, so an increase in the pound should not come as a surprise.
On the 4-hour chart, the quote settled above the 127.2% retracement level of 1.2250, allowing traders to push the price to the 100,0% retracement level of 1.2674. The ascending corridor indicates a bullish bias. The pair may plunge once it closes below the corridor.
Commitments of Traders:
Bearish sentiment decreased slightly last week. Speculators opened 2,539 new long positions and closed 5,852 short positions. Overall, sentiment is still bearish with a wide gap between shorts and longs. Traders continue selling the pair although bullish sentiment has started to grow in recent months. Nevertheless, it is a long and slow process. It has lasted for several months now, but the number of shorts still twice exceeds that of longs. Growth may extend as technical analysis of the ascending corridor on the H4 chart shows. Still, there may arise factors this week that may shape the greenback's value. Anyway, we now see the long-awaited growth but it is hard to define with the help of COT reports. On the other hand, the net position is rising along with the pound.
Macroeconomic calendar:
United Kingdom: Inflation Rate (07-00 UTC).
United States: FOMC Interest Rate Projections (19-00 UTC); Fed's Interest Rate Decision (19-00 UTC); Fed Press Conference.
On Wednesday, fundamental factors are likely to have a strong influence on the market.
Outlook for GBP/USD:
It will become possible to open short positions at 1.2238 and 1.2111 after a rebound at 1.2342 on the H1 chart. Meanwhile, buying the pair currently seems risky despite a continuation of the uptrend.