GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair performed a fall to the ascending trend line and resumed the growth process in the direction of the corrective level of 200.0% (1.4216). Thus, at the moment, the mood of most traders remains "bullish", as the trend line continues to say. Only the consolidation of the pair's rate under it will allow traders to expect a drop in the British dollar's quotes. Meanwhile, the Governor of the Bank of England, Andrew Bailey, gave a speech. Let me remind you that the head of the Bank of England made a report on monetary policy in Parliament yesterday. Bailey said short-term changes in inflation should not seriously affect the long-term inflation trend. According to the governor, the Bank of England does not expect a strong acceleration in inflation, up to a maximum of 2.5% by the end of the year.
In the medium term, the regulator expects a slowdown in GDP growth, as supply growth returns to its long-term trend. The Bank of England does not believe that it will be necessary to introduce a negative key rate in the near future. In addition, Bailey said that the current plan to wind down the quantitative easing program is too complex. Let me remind you that last week Bailey also spoke about the possible completion of economic stimulus next year. Thus, the Bank of England has already twice made it clear to traders that there is no question of lowering the rate now, and, most likely, from next year, monetary policy will gradually tighten. At the same time, the Bank of England does not expect a super-recovery of the economy and a mega-acceleration of inflation. It seems that they are counting on a slow and gradual economic recovery.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a new reversal in favor of the US currency after the formation of a bearish divergence at the CCI indicator. But at the moment, the growth process has already been resumed, and the quotes again tend to the corrective level of 0.0% (1.4240). Closing the pair's rate above this level will work in favor of continuing the growth of the British dollar.
GBP/USD – Daily.
On the daily chart, everything still rests on the trend line, along which the movement of quotes of the pound/dollar pair continues. Closing quotes under this line will work in favor of the US dollar and start falling in the direction of the corrective level of 100.0% (1.3513). But if this does not happen, the growth process will continue in the direction of the corrective level of 161.8% (1.4812).
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 remain.
Overview of fundamentals:
There were no other interesting events in the UK on Monday, apart from Andrew Bailey's speech in the UK Parliament.
News calendar for the United States and the United Kingdom:
US - consumer confidence indicator (14:00 UTC).
On Tuesday, the calendar of economic events in the UK is completely empty, and only a very insignificant report on consumer confidence will be released in the US. We can assume that the information background will be absent today.
COT (Commitments of Traders) report:
The COT report of May 18 on the British dollar showed that the "bullish" mood of speculators became slightly weaker, in contrast to the report of a week ago. Thus, in general, it is noticeable that speculators continue to increase long contracts for the British. However, do it moderately. The total number of long contracts in the "Non-commercial" category of traders exceeds the number of short contracts by two times. Thus, the sentiment remains "bullish" and the latest COT reports have not shown any drastic changes in this. I will also note the extremely low activity of all categories of traders, as a total of only 6.5 thousand contracts were opened during the reporting week.
GBP/USD forecast and recommendations for traders:
It was recommended to buy the British dollar with the targets of 1.4216 and 1.4240, as a rebound from the trend line on the hourly chart was made. Now, these positions should be kept open. I recommend selling the pound if a close is made under the uptrend line on the hourly chart with targets of 1.4064 and 1.4008.
Terms:
"Non-commercial" - 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 support current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
