GBP/USD – 1H.
On the hourly chart, the quotes of the GBP/USD pair performed a reversal in favor of the US currency and resumed the process of falling in the direction of the levels of 1.3570 and 1.3522. A downward trend corridor was also formed, which characterizes the current mood of traders as "bearish". It is also very important to close the pair's exchange rate under the Fibo level of 100.0% (1.3625) since this level prevented the British dollar from continuing to fall. Well, it is very symbolic that the British dollar began to fall on the day when the Bank of England will sum up the results of the meeting on monetary policy. What's it? The fear of traders to hear something unpleasant? Let me remind you that rumors about negative rates have been going around for a long time.
The Bank of England and Andrew Bailey will not be able to constantly respond, saying "rates are being studied". They have been studied for more than 6 months. And if they are introduced, then they will be introduced in the coming months, when the British economy especially needs support after three "lockdowns", after serious losses due to the coronavirus, and after the UK leaves the EU. Right now, the economy needs to be stimulated so that it starts to recover from the crisis, as GDP forecasts for the fourth and first quarters say that the economy shrank in these months, not recovered. Thus, today, traders are waiting for at least comments from representatives of the Bank of England regarding negative rates. And, most likely, they will wait for them. It is unlikely that the governor will say that the bank has abandoned the idea of lowering the rate. More hints of the use of negative rates in 2021 are likely to follow.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a fall to the lower border of the side corridor, indicated by a blue rectangle. There has been no closure under this line yet. The rebound from it will work in favor of the British currency and the resumption of growth in the direction of the upper limit. Closing under the rectangle will increase the probability of a further drop in quotes in the direction of the corrective level of 100.0% (1.3481).
GBP/USD - Daily.
On the daily chart, the pair's quotes performed a consolidation above the corrective level of 100.0% (1.3513), and then rebound from it. Thus, the growth process can be continued in the direction of the Fibo level of 127.2% (1.4084).
GBP/USD - Weekly.
On the weekly chart, the pound/dollar pair completed a close over the second downward trend line. Thus, the chances of long-term growth of the pound are significantly increased.
Overview of fundamentals:
On Wednesday, the UK released the index of business activity in the services sector, however, it also had no impact on traders, as did the European and American reports.
News calendar for the United States and the United Kingdom:
UK - the decision on the main interest rate of the Bank of England (12:00 GMT).
Uk - planned volume of asset purchases by the Bank of England (12:00 GMT).
UK - votes of the ILC members on the main interest rate (12:00 GMT).
UK - Bank of England monetary policy report (12:00 GMT).
UK - speech by the Governor of the Bank of England, Andrew Bailey (13:00 GMT).
US - number of initial and repeated applications for unemployment benefits ( 13:30 GMT).
On February 4, the results of the Bank of England meeting will be summed up in the UK, and this is the main event of the day, which is very important for the prospects of the Briton.
COT report (Commitments of Traders):
The latest COT report from January 26 showed quite significant changes. To begin with, speculators, as the most important category of traders, have dramatically changed their mindset and started to build up short contracts. More than 6 thousand of them were opened. But it was also opened and 2.5 thousand contracts in length. Thus, I can conclude that the mood of the "non-commercial" category has become more "bearish", therefore, the probability of a fall in the British dollar quotes in the near future is growing. Thus, if the level of 1.3744 is not overcome, then the chances of a fall in the British dollar will increase dramatically. In the meantime, speculators can accumulate short positions.
Forecast for GBP/USD and recommendations for traders:
It is recommended to make new purchases of the British dollar when closing above the level of 1.3744 on the hourly chart with a target of 1.3820. It is recommended to sell the pound sterling when the quotes break off from the level of 1.3744 on the hourly chart with the targets of 1.3698 and 1.3625 or when they consolidate under the level of 1.3625 with the targets of 1.3570 and 1.3522.
Terms:
"Non-profit" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
