FX.co ★ Forecast and trading signals for GBP/USD for February 4. Detailed analysis of the pair's movement and trade deals. Paradoxically, but true: the pound barely rose by 40 points after the rate hike

GBP/USD 5M

The GBP/USD currency pair traded very strangely on Thursday. Firstly, a highly volatile "roller coaster" was observed during the US trading session. Secondly, the pound rose by only 40 points at the end of the day. The first fact suggests that traders did not agree on the question of what to do with the pound. But why, if the Bank of England raised the key rate by 0.25%, and could raise it by 0.5%? After all, this is the strongest bullish factor!!! The European currency rose by 180 points yesterday, despite the fact that the European Central Bank did not announce any hawkish decisions!!! The second fact is a paradox in general. The pound reacted with a rise of 40 points after the BoE raised the rate for the second time in a row... From our point of view, everything that happened yesterday in the foreign exchange market is one big paradox, an incredible combination of circumstances. In principle, now most analysts and experts are busy just explaining what happened on Thursday. From our point of view, now the market will recover in the coming week. And this process will not begin until next Monday, because today we still have to go through the US Nonfarm. As for trading signals, it is very difficult to call them such. And very well, since they clearly should not have been worked out. The first signal, either to buy or to sell, was formed when the pair reached the area of 1.3598-1.3607 and broke through it, but after 10 minutes it began to fall and went back below it. Since it was during the formation of this signal that the BoE announced the results of the meeting, and there was no clear and unambiguous signal, it should be ignored. For the second time, the pair stumbled over the 1.3598-1.3607 area a few hours later. But even this time I failed to bounce back from this area, nor confidently overcome it. By that time, it had already become clear that there would be no such trend movement as for the euro/dollar pair. Therefore, this incomprehensible signal should also be ignored.

COT report

The latest Commitment of Traders (COT) report on the British pound signals only one thing: the end of the downward trend. Thus, we can at least conclude that the downtrend is nearing its end. The green line of the first indicator (the net position of the "non-commercial" group) first moved to zero from top to bottom, therefore it went much below the zero mark, and now it has returned to it. In addition, in recent weeks, the green and red lines have been moving towards each other, which signals the end of the trend. In our case, a downward trend. Thus, even if the British pound continues to fall to the previous low, the trend may still end in the near future. Or, COT reports should again begin to indicate an increase in the bearish mood among professional traders. At the moment, COT reports suggest that the mood of the major players remains bearish, but "minimally bearish", so to speak. The trend is now to strengthen the bullish intentions. Thus, we now expect the pound to fall to the level of 1.3162, but this round of decline may be the last.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. February 4. The ECB left the key rate unchanged and will continue to stimulate the economy.

Overview of the GBP/USD pair. February 4. The Bank of England raised its key rate, and the pound reluctantly rose.

Forecast and trading signals for EUR/USD on February 4. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

The pound/dollar pair continued its upward movement on the hourly timeframe, which even allowed the formation of a new upward trend line. However, it has too strong a tilt angle, so it can be canceled today. Especially if Nonfarm in the US turns out to be strong, and the market will work out this report as it should, and not as yesterday. However, the situation for the pound is now absolutely unstable and ambiguous. Therefore, first of all, any positions should be opened with caution. We highlight the following important levels on February 4: 1.3489, 1.3598-1.3607, 1.3667, 1.3741. The Senkou Span B (1.3510) and Kijun-sen (1.3498) lines can also be signal sources. Signals can be "bounces" and "breakthroughs" of these levels and lines. It is recommended to set the Stop Loss level to breakeven when the price passes in the right direction by 20 points. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. Only the index of business activity in the construction sector is scheduled to be published in the UK on Friday. However, the markets on Friday may still "move away" from the results of the BoE meeting, and is also impressed by the reports on unemployment in the United States, on the labor market, as well as on wages. Today, it looks like another fun day is waiting for us.

Explanations for the chart:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are trend lines, trend channels and any other technical patterns.

Indicator 1 on the COT charts is the size of the net position of each category of traders.

Indicator 2 on the COT charts is the size of the net position for the non-commercial group.