GBP/USD. April 27. The GDP report will not affect the Fed’s policy
April 27, 2023 10:23 am
On the hourly chart, the GBP/USD pair on Wednesday reversed in favor of the British currency and rose to the previous day’s peak at the price level of 1.2505. The bulls currently have a very small advantage if we consider the pair’s movement over the last two weeks and a very large one in the last 2-3 quarters. They now hold their advantage and don’t want to part with it. The news background doesn’t support the pound very much. After the strong growth of the British currency in the last 8–9 months, strong reasons are needed for bulls to continue active purchases. This explains the sluggish upward movement in the last month and a half. During all this time, horizontal movement has been observed, but bears cannot seize the initiative.
The level of 1.2447 is currently not a source of signals. Traders circle it almost daily, a characteristic feature of horizontal movement. Yesterday, the US dollar had good chances for growth, as the report on orders for durable goods was stronger than traders’ expectations. However, like the speech of Treasury Secretary Janet Yellen, it was ignored. I already mentioned in the euro currency review that the dollar’s decline on Wednesday was unrelated to the US public debt news. Today, we expect another important report, but whether it will help the pair to end horizontal movement is a big question. US GDP in the fourth quarter may grow by 2.0%, which would mean a decrease in its growth rate (the third quarter’s value was +2.6%). This is not yet a recession, but the rates are falling for the second quarter in a row, and the Federal Reserve believes that the recession will begin in the current year’s third quarter. If the economic decline is more substantial, the dollar may also fall in the second half of the day. But the forecast will be confirmed by about 80%.
On the 4-hour chart, the pair has consolidated below the ascending trend corridor. I believe the exit from the corridor is a crucial graphical signal, indicating a change of sentiment to “bearish.” The “bullish” divergence allowed for some growth, but in recent weeks the pair’s movement can be characterized as “horizontal.” The level of 1.2441 is weak now, but each closure below it may signal the beginning of the pair’s decline toward the corrective level of 127.2% (1.2250).
Commitments of Traders (COT) report:
The sentiment of the “non-commercial” category of traders changed to more “bullish” during the last reporting week. The number of long contracts held by speculators decreased by 1094 units, while the number of short contracts decreased by 4794. The overall sentiment of major players has shifted to “bullish,” but the number of long and short contracts is now almost equal – 54 thousand and 52 thousand, respectively. The market sentiment for the British currency remained “bearish” for a long time, but all this time, bulls were strengthening their positions, and the British currency was actively growing. At this time, graphical analysis indicates a possible decline, but it may be short-lived. Thus, the prospects for the pound remain favorable, but a decline can be expected soon.
News calendar for the US and the UK:
US – fourth quarter GDP (12:30 UTC).
US – initial jobless claims (12:30 UTC).
On Thursday, the economic events calendars contained only two entries for the US. The GDP report is very important, but traders may ignore it. The impact of the news background on traders’ sentiment today will be weak.
GBP/USD forecast and advice for traders:
I recommend selling the British currency with targets at 1.2380 and 1.2342 in case of consolidation below the 1.2441–1.2447 zone. Purchases of the British currency were possible upon closing above the 1.2447 level on the hourly chart with a target of 1.2500–1.2510. This target was reached yesterday. A rebound from the 1.2447 level – new purchases with targets at 1.2500 and 1.2546.
The material has been provided by InstaForex Company – www.instaforex.com
On the hourly chart, the GBP/USD pair on Wednesday reversed in favor of the British currency and rose to the previous day’s peak at the price level of 1.2505. The bulls currently have a very small advantage if we consider the pair’s movement over the last two weeks and a very large one in the last 2-3 quarters. They now hold their advantage and don’t want to part with it. The news background doesn’t support the pound very much. After the strong growth of the British currency in the last 8–9 months, strong reasons are needed for bulls to continue active purchases. This explains the sluggish upward movement in the last month and a half. During all this time, horizontal movement has been observed, but bears cannot seize the initiative.
The level of 1.2447 is currently not a source of signals. Traders circle it almost daily, a characteristic feature of horizontal movement. Yesterday, the US dollar had good chances for growth, as the report on orders for durable goods was stronger than traders’ expectations. However, like the speech of Treasury Secretary Janet Yellen, it was ignored. I already mentioned in the euro currency review that the dollar’s decline on Wednesday was unrelated to the US public debt news. Today, we expect another important report, but whether it will help the pair to end horizontal movement is a big question. US GDP in the fourth quarter may grow by 2.0%, which would mean a decrease in its growth rate (the third quarter’s value was +2.6%). This is not yet a recession, but the rates are falling for the second quarter in a row, and the Federal Reserve believes that the recession will begin in the current year’s third quarter. If the economic decline is more substantial, the dollar may also fall in the second half of the day. But the forecast will be confirmed by about 80%.
On the 4-hour chart, the pair has consolidated below the ascending trend corridor. I believe the exit from the corridor is a crucial graphical signal, indicating a change of sentiment to “bearish.” The “bullish” divergence allowed for some growth, but in recent weeks the pair’s movement can be characterized as “horizontal.” The level of 1.2441 is weak now, but each closure below it may signal the beginning of the pair’s decline toward the corrective level of 127.2% (1.2250).
Commitments of Traders (COT) report:
The sentiment of the “non-commercial” category of traders changed to more “bullish” during the last reporting week. The number of long contracts held by speculators decreased by 1094 units, while the number of short contracts decreased by 4794. The overall sentiment of major players has shifted to “bullish,” but the number of long and short contracts is now almost equal – 54 thousand and 52 thousand, respectively. The market sentiment for the British currency remained “bearish” for a long time, but all this time, bulls were strengthening their positions, and the British currency was actively growing. At this time, graphical analysis indicates a possible decline, but it may be short-lived. Thus, the prospects for the pound remain favorable, but a decline can be expected soon.
News calendar for the US and the UK:
US – fourth quarter GDP (12:30 UTC).
US – initial jobless claims (12:30 UTC).
On Thursday, the economic events calendars contained only two entries for the US. The GDP report is very important, but traders may ignore it. The impact of the news background on traders’ sentiment today will be weak.
GBP/USD forecast and advice for traders:
I recommend selling the British currency with targets at 1.2380 and 1.2342 in case of consolidation below the 1.2441–1.2447 zone. Purchases of the British currency were possible upon closing above the 1.2447 level on the hourly chart with a target of 1.2500–1.2510. This target was reached yesterday. A rebound from the 1.2447 level – new purchases with targets at 1.2500 and 1.2546.
The material has been provided by InstaForex Company – www.instaforex.com
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