GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair quotes on Wednesday performed an increase above the level of 1.1859. However, they returned to this level today and got into a "storm." At night, the pair's quotes fell, recovered in the morning, then collapsed again and recovered again. Such movements of the pair can be explained by the fact that many interesting and important information came from the UK and the US, to which traders react differently. For example, yesterday, a report on inflation in Britain was released, which showed another increase in this indicator. A day earlier – a report on American inflation, which generally beats all anti-records. This morning - data on unemployment in the UK, average wages. At the same time, some of the data obtained are unequivocally in favor of the Briton.
For example, yesterday's speech by Jerome Powell plays into the hands of the British currency since the rhetoric of the Fed chairman remained "dovish," and there was no single hint of the completion of the economic assistance program. Rising inflation can be interpreted in different ways. However, rising unemployment cannot be interpreted in favor of the pound. This indicator increased in May from 4.7% to 4.8%. Wages are growing and increased by 7.3% in May. However, given the growing inflation, this achievement is very doubtful. The number of applications for unemployment benefits in June decreased by 115 thousand. However, the unemployment rate has increased. In general, all the latest reports and figures are very contradictory. Thus, the dynamics of the British perfectly reflect the nature of the information background. Also, the number of coronavirus cases continues to grow in the UK, and this figure is already approaching the level of 40,000 per day. At the same time, on July 19, the British government wants to cancel all quarantine restrictions completely.
GBP/USD – 4H.
The GBP/USD pair on the 4-hour chart performed a close under the corrective level of 23.6% (1.3870). Thus, the decline in quotes can be continued in the direction of the Fibo level of 38.2% (1.3642). Also, a lot will depend on the level of 1.3859 on the hourly chart, near which the pair continues to spin. On the 4-hour chart, closing above the level of 1.3870 will again allow traders to count on continued growth.
Overview of fundamentals:
On Wednesday, the calendars of economic events in the UK and the US contained many different entries. In general, the information background was average in strength.
News calendar for the United States and the United Kingdom:
UK - change in the number of applications for unemployment benefits (06:00 UTC).
UK - unemployment rate (06:00 UTC).
UK - change in the level of average earnings (06:00 UTC).
US - number of initial and repeated applications for unemployment benefits (12:30 UTC).
US - change in the volume of industrial production (13:15 UTC).
US - Chairman of the Federal Reserve Board of Governors, Jerome Powell, will speak (13:30 UTC).
On Thursday, data on unemployment and wages have already been released in the UK. However, there are still not the most important reports from the United States and another speech by Jerome Powell in Congress, which is unlikely to be much different from yesterday.
COT (Commitments of Traders) report:
The latest COT report on July 7 for the British showed that the mood of the major players had changed again in favor of the bulls. During the reporting week, speculators increased 4,732 long contracts and 1,870 short contracts. Thus, the "bullish" mood of the "Non-commercial" category of traders has slightly increased. But in general, the situation continues to be very similar to the case for the euro. The "bullish" mood of the significant players remains, and the advantage of open long contracts is about 1.5 times. Thus, the British dollar retains the chances of resuming growth.
Forecast for GBP/USD and recommendations to traders:
I recommend new purchases of the British with the targets of 1.3906 and 1.3972 if the pair closes above the level of 1.3859 on the hourly chart. I recommend selling the pound today if there is a rebound from 1.3859 with targets of 1.3800 and 1.3741.
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 ensure current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.
